How bear-to-bull transitions generate the greatest fortunes … the technicals that suggest we’re moving into a new bull … an example of a price/value schism … join Luke today at 4 PM ET
The biggest misunderstanding on Wall Street is that fortunes are made during raging bull markets.They aren’t – fortunes are made in bear markets.Specifically, fortunes are made in the months when bear markets suddenly and dramatically turn into new bull markets.
That comes from our hypergrowth expert Luke Lango.Despite the market’s recent choppiness, Luke believes we’re in such a bear-to-bull transition right now, and it’s creating one of the best buying opportunities in years.In fact, his research concludes that today’s conditions have occurred only three times in the last 35 years. And in each of those instances, backtests show that ensuing gains were in the quadruple digits.This afternoon at 4 PM ET, Luke is holding a live event to reveal the results of his research. Better yet, he’ll be giving away the name and ticker of his favorite stock poised to benefit from this bear/bull transition.In today’s Digest, let’s better understand this opportunity as a preview of this afternoon’s big event.
The formula for wealth creation
When you study the most successful investors of all time, their outperformance reduces to one simple distinguishing characteristic…They’re better at finding stocks where there’s a significant misalignment between price and value.While masquerading as the same thing, price and value can be very different. Warren Buffett called this out in his usual folksy way when he said “Price is what you pay, value is what you get.”Most times, price and value don’t diverge to such an extent that investors can take advantage for big gains. But when such rare, gaping divergences do happen, that’s when enormous wealth generation is possible.Take billionaire short-seller Jim Chanos. He’s made a career out of identifying stocks with prices that are egregiously too high compared to the company’s underlying value.He bets against those stocks, and when the market finally wakes up to this price/value divergence and responds accordingly, the ensuing convergence of price and value makes Chanos his billions.We just mentioned Buffett – as I’m sure you know, he’s made his billions the other way, identifying stocks with market prices that are far too low relative to their inherent value. Over time, as price and value converge, it acts as a gale-force tailwind for Buffett’s net worth.In both cases, the core wealth-building opportunity reduces to a fracture between price and value. And Luke believes today’s market is historically fractured thanks to the bear-to-bull transition that’s happening right now.
“Trust the technicals”
Luke is confident that we’re currently transitioning out of 2022’s bear market into a robust 2023 bull market. At the same time, he believes too many investors are looking in the rearview mirror, pricing stocks relative to “what was” rather than “what will be.”This is creating a major schism between price and value – and that’s our wealth-building opportunity.From Luke:
…Bear-to-bull transitions only come around once every five to six years, too.When they do come around, you owe it yourself to capitalize on them. These transitions give investors the opportunity to earn a decade’s worth of gains in a matter of months.And that brings us to today.Today, we are staring at one of these fortune-making bear-to-bull transitions.With inflation crashing, layoff announcements piling up, and banks failing, the Fed will be forced to pause its rate-hike campaign within the next few months, most likely before June.Historically speaking, whenever the Fed pauses a rate-hike cycle, stocks soar!
If we look at the CME Group’s FedWatch Tool, traders are currently expecting one more quarter-point hike next week. But then odds of a Fed pause in June become the dominate market narrative. The probability clocks in at 61% as I write Thursday morning. Meanwhile, Luke points out that if we analyze the market’s technical set-up, there are abundant signals that this bear/bull transition is well-underway.Here he is to explain:
…Every single technical buying indicator has flashed over the past few months. We got the Golden Cross trigger. We got the Breakaway Momentum thrust. We got the Whaley Breadth thrust. The Triple 70 thrust. Back-to-back quarters of positive returns in the S&P 500. So on and so forth.All of these are technical signs of a new bull market.Perhaps most important, the tech-heavy Nasdaq just soared into a technical new bull market by rallying more than 20% off its December lows.
An example of a convergence in real time
To illustrate this price/value dislocation opportunity in real time, let’s look at ROKU.It’s a streaming device maker that operates a TV software ecosystem that connects consumers to their favorite streaming services. It is the “cable box of streaming TV.”
Luke has written that ROKU “has always, still is, and will continue to grow like wildfire as more and more users, content, and ad dollars shift into the streaming TV space.”Be that as it may, ROKU’s stock was destroyed in last year’s bear market. Yet, while that was happening, the company was still generating more and more revenue.In other words, a divergence formed – value up, price down.Below, we look at ROKU’s price chart as of last spring. You’ll see the stock price tanking at the same time that revenues (in orange) and estimated revenues (in blue) continue climbing.
How has this dynamic evolved in the months since?Well, the 2022 bear market continued to inflict even more pain on ROKU – even as the company’s revenues continued climbing.ROKU’s price hit its most recent low in late-December, just before January’s stock market gains kicked in, which marked one of the best starts to a year in decades.Below, we’ll look at an updated chart of ROKU’s price and its revenues/revenue estimates. I’ll circle a small bump in price from that December-low to its recent high-point in February.Take a look at it first, then I’ll provide commentary.
That bump doesn’t look like much, right?Well, that was an 84% gain.Now, take a look at the blue revenue line that’s been rising, as well as the orange estimated revenue line that’s going even higher…As ROKU’s price eventually converges with its inherent value relative to such fundamentals, what do think will happen with its price?Again, the bump in the price above – which looks like next to nothing – represents 80%+ gains.And yet, ROKU’s price still remains miles below where it traded in past years when revenues were much lower than they are today, and were drastically lower than where they’re projected to be.This is an example of the price/value fracture that Luke believes is about to drive quadruple-digit returns for select stocks.
Today at 4 PM ET, Luke will be diving into further details on this opportunity, and explaining how you can position yourself to take advantage of it today
He’ll also be giving away the name of his favorite stock that’s most likely to benefit from this bear/bull shift.Before we wrap up, there’s one detail we haven’t covered in today’s Digest because it remains a mystery even to me.Apparently, Luke’s research has identified a technical rarity about today’s market that suggests the current bear/bull transition is likely to be even more explosive than usual.We’ll give Luke the final word as he speaks to this:
…We are now presented with a generational money-making opportunity.But it’s only going to make money for those who capitalize on it.That’s exactly what we’re doing today.This afternoon, after the markets close, we are going to unveil an ultra-rare stock market phenomenon we discovered that can help you max out your gains when bear markets turn into bull markets.It’s a phenomenon that truly harnesses the power to potentially turn thousands of dollars… into millions of dollars.It only appears about once a decade, and right now, it is appearing for the first time in 15 years.Today, you can find out how to leverage this phenomenon to supercharge your portfolio right now.Reserve your seat right now.
Have a good evening,Jeff Remsburg
