The question every investor gets wrong

Editor’s note: Most investors spend their time trying to answer a simple question: Is the market bullish or bearish?

But this question can lead you astray.

Some of the most successful investors in history did not focus on market forecasting at all. Instead, they focus on identifying repeatable patterns – specific conditions that tend to lead to profitable trades, regardless of whether stocks are rising or falling.

That’s what TradeSmith CEO Keith Kaplan Explores today. Keith joins us today to explain how his team uses AI to detect these types of “signals” across thousands of stocks. It’s the same kind of approach that has powered some of the most successful hedge funds of all time.

And now, you can actually explore the system yourself – researching stocks, seeing active signals, and learning how it works – before Keith goes over it all at his next free event on Wednesday, April 22 at 10 a.m. EST. Click here to reserve your place and get access.

Are you bullish or bearish?

As an investor, this is a question you hear a lot.

Your brother-in-law asks you at a family barbecue. A CNBC anchor asks a top economist where the market is headed. Or your broker sends you his annual forecast.

Every week since 1987, the American Association of Individual Investors has asked its members where they think the market is headed in the next six months.

Millions of investors are asking the same question – and they’re all getting this wrong.

The bull or bear question is a beginner’s trap.

Professional investors – especially those inside the world’s most profitable hedge funds – don’t think that way. They look for ways to profit whether stocks rise or fall.

No one understood this better than Jim Simmons.

He didn’t build the most profitable hedge fund in history, Renaissance Technologies, by trying to predict market direction. Instead, he uses advanced algorithms – and a wealth of market data – to detect recurring “signals” in stocks that indicate high-probability trading setups.

Bull market or bear market, it doesn’t matter. The signals worked in both cases.

It’s the same principle behind the new AI-powered trading system that my team and I are working on Want Smith They spent over a year developing.

It’s inspired by Simons’s search for signals. The results amazed us.

In a five-year backtest, a typical portfolio of these signals trades turned $10,000 into $1.2 million.

In 2022 — the worst year for stocks in half a century — they had an average gain of 16.6% while the S&P 500 gained an average of 16.6%. He falls Nearly 20%.

I’ll show you more about how it works in a bit. Better yet, I give you Access the trial version of our software So you can try it yourself.

First, it is important to understand how Simons created this unconventional trading technique. In the late 1970s, it started in a cramped office in a mall on Long Island — as far away from the glamor of Wall Street as possible.

Find unique signals

Simons had just left his position as chair of the mathematics department at Stony Brook University. He ran his fledgling business from a nearby shopping mall.

He wasn’t interested in earnings reports or analyst forecasts. He knew that if you did what everyone else did, you would get the same returns as everyone else. He wanted to beat the market, not just follow it.

So he looked for unique signals – mysterious, recurring patterns buried in a wealth of market data that indicated predictable movements.

To find them, he didn’t hire Wall Street traders. Instead, he hired mathematicians, physicists, and two IBM scientists who had spent their careers building speech recognition models.

They were building computer models to predict the next word in a sentence based on patterns in previous text. Simons asked them to apply the same logic to stocks.

Renaissance Technologies averaged 66% annual returns over the next four decades. This made it the most profitable hedge fund in history.

For obvious reasons, Simmons was in no rush to share his secrets. So this market-beating approach has been locked into a handful of elite hedge funds, which has widened the wealth gap rather than narrowed it.

But throughout our 21-year history, our mission at TradeSmith has been to put hedge fund-level tools into the hands of everyday investors. With our latest innovations, we’re unlocking the secrets of Wall Street…

We’ve never gone this deep before

We are a Baltimore-based financial technology company that develops hedge fund-level analytical systems for self-directed investors.

More than 134,000 people in 86 countries use our software to manage more than $29 billion in assets. And we’re always innovating – testing trading strategies, financial metrics and data patterns to uncover profitable systems and indicators.

This is what made us stand out in it Forbes, The Wall Street Journaland The Economist.

It started with our risk management program, TradeStops. It takes the emotions out of investing by showing you the ideal time to sell your shares.

We’ve also created software that detects hidden seasonal patterns in stocks… detects undervalued options trades… and uses AI to predict stock movements for up to 21 trading days.

But our new system is deeper than ever.

It evaluates 2.09 million potential trades per day across 2,467 stocks. He runs each one through 847 individual calculations, looking for the same types of signals that Simons built his career on.

When the right combination of factors are aligned, our system flags it as a high probability trading setup.

The results speak for themselves.

Historical win rates of 90% and higher

For example, on October 30, 2020 — with markets rocked by a new coronavirus variant — the system flagged itself as… Palantir Technologies Inc. (Belter) Thumbprint has a historical success rate of 95%.

It showed that every time Palantir fell for at least three consecutive days…daily price fluctuations were shrinking…and at least 5,000 US hospitals were accepting new patients…the stock was about to jump.

The forecast called for a 5.8% increase in nine days. The backtest result was even better: 15.1% in seven days.

How do hospital numbers relate to Palantir’s stock price?

It turns out a lot.

Palantir’s largest customers at the time were hospitals. With about 6,100 hospitals operating across the United States, falling below 5,000 facilities open would be problematic for the company’s revenue. When hospital numbers decline, Palantir feels it — and so does its stock price.

Our system is designed to find these types of connections. Not the personalities of the hospital itself, but the fingerprints they leave behind in the data.

Remember, this signal was launched during the pandemic. Which brings me to an important point about how it works…

Bull or bear market: our system doesn’t care

No one knows exactly why every signal has a history that precedes a big movement.

And honestly, it doesn’t matter. Our system looks for alliances that have worked before — even when there’s no obvious reason why.

This means that this new type of trading system does not care whether we are in a bull or bear market. It does not require a strong economy or a calm geopolitical environment. It just needs certain factors for alignment.

One example of this is signal playback Walmart Inc. (And die) It has been triggered 24 times over the past decade – a rare alignment of three defining conditions in the history of stock prices.

The WMT has to reverse its trend one day… reach a higher high and a lower low the next… and then close lower for the day. When these specific factors align, a winning trade is posted 92% of the time.

This signal worked in the bull market of 2019 and the bear market of 2022. It even worked in 2017, after one of Walmart’s worst earnings reports in a decade.

This is what makes it so powerful today. With the price of oil rising above $100 a barrel… and increased volatility in the stock market… you don’t want to rely on a system that only works during good times.

I’ll walk you through how it works in more detail – including the patterns it’s tracking now and the trades it’s signaling in the coming weeks – during our launch event.

You go Wednesday, April 22 at 10 a.m. EST. So make sure to clear some time in your calendar and Register your interest.

We won’t just reserve your place. We’ll also give you instant access to the new beta version of our software before the event.

Go here to register for the launch and enjoy the experience. You can use it to find active signals for thousands of stocks – for free – from now until April 22.

We have been working on this new trading system for the past 12 months. And since becoming CEO of TradeSmith, I’ve never been more excited about what we’re about to reveal. So, I hope to see you there.

Keith Kaplan

CEO, Want Smith

note: We have already allowed a small group of investors to test the system before launch. One of our beta users, Edward F., has reported a perfect success rate on every trade he has closed so far. Another, John M, called it a “game changer.” Here is the link to register now To access the beta program before the launch event on April 22.