The power of trend investing… is investing at all-time highs safe?… the biggest returns might be starting… a trading framework for today’s market… how to learn more today
In the mid-1970s through early 1980s, the “Prince of the Pit,” Richard Dennis turned $400 into more than $200 million trading futures.
He’s famous for creating the Turtle Traders experiment in the 1980s, proving that complete novices could become million-dollar traders by following his rules.
And what was the core principle behind his rules?
From Dennis:
Whatever method you use to enter trades, the most critical thing is that if there is a major trend, your approach should assure that you get in that trend.
“Trend” is one of the most overlooked – and most critical – drivers of making money in the market.
Fundamentals and valuations absolutely matter, but even the best analysis can’t save you if you’re trying to swim against a fast-moving current. Many once-confident investors have gone broke waiting for the market to “make sense” under their cash flow models and valuation math.
As John Maynard Keynes famously put it:
The market can stay irrational longer than you can stay solvent.
Today, nervous bears are pointing toward a handful of indicators that scream “stocks are historically overvalued! Beware a crash!”
And they’re not wrong.
But today’s big-picture trend is clearly bullish. Momentum is strong, and even if we are in the final innings of a bull market, history shows late-game returns can be the most spectacular.
So, let’s talk about how to trade today’s bull while respecting the bust that might come tomorrow.
Why it’s not yet time to bail on the market
First, let’s address our recent all-time highs.
Do we need to worry about remaining in the market as we push into blue sky territory?
Let’s go to my friend Meb Faber, CEO/CIO of Cambria Investments, also a widely respected quant analyst:
Is buying stocks at an all-time high a good idea?
No, it’s not a good idea, which should surprise no one.
The fact that it is a GREAT idea, well, that should surprise everyone.
Meb detailed the results of a back-test he ran that had two rules: remain in stocks if they’re trading at all-time highs at the end of the month. If they’re not at all-time highs, then move into government bonds.
Here’s the conclusion:
It turns out, it’s a pretty damn good strategy. Better returns than just stocks, lower volatility, and WAY lower drawdowns…
It’s an acknowledgement that all-time highs are nothing to be afraid of.
Meb isn’t the only investor who has come to this conclusion.
William O’Neil, who founded Investor’s Business Daily and created the very popular swing-trading system known as CANSLIM, had a quote about this:
It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower.
And with interest rate cuts from the Federal Reserve now appearing increasingly likely in September, this bull will get some fresh fuel.
But expensive valuations and rate cuts do suggest a looming end date to the fun
Let’s go to our hypergrowth expert Luke Lango:
Pile tariffs and extra stimulus on top [of the coming interest rate cuts], and you could get late-2026 or early-2027 inflation that forces the Fed back into “Volcker mode.”
That would risk ending this AI Boom just as the dot-com boom ended in the early 2000s.
Now, as we noted in Friday’s Digest, Luke believes we have at least 12 more months before this AI boom will run into macro headwinds and morph into a bust – and that period could produce fireworks.
Back to Luke:
The last few years of a stock market boom can often be the most profitable.
Just look at the Dot-Com Boom of the 1990s.
Tech stocks had some amazing years therein. The Nasdaq Composite rallied 40% in 1995, about 20% in ’96, another 20% in ’97, and then 40% again in ’98.
But tech stocks saved their best for last, with the Nasdaq soaring almost 90% for its best year ever in 1999.
Then, the bust started in 2000.
Point being: The best year for tech stocks in the ’90s was the final year of the Dot-Com Boom.
How Luke is positioning himself to ride the trend today
Luke is trading bullish momentum – specifically, bullish AI/tech stocks – through a “stage analysis” framework.
For newer Digest readers, stage analysis is an analytical framework that categorizes a stock’s price movement into four stages:
- Introduction (sideways at a bottom)
- Growth (a bullish breakout)
- Maturity (sideways at a top)
- Decline (a bearish drawdown)
This is a powerful framework that helps demystify the market, providing a helpful framework for when to remain with a trade versus when to take profits.
I’d bet that if you reviewed your last handful of losing trades, there’s a good chance you made one of two inadvertent mistakes:
- Invested during some stage other than “2”
- Sold at a loss in a drawdown that was just a smaller move within a broader Stage-2 breakout, illustrated in the graphic below
As Luke looks at today’s market, he’s seeing an abundance of Stage-2 breakout trades coming from AI/tech
But given the risk of an eventual tech bust, he’s more comfortable trading those moves with the expectation of taking profits in Stage 3 rather than holding for the long haul.
Here’s Luke:
AI is also creating the biggest, fastest moves I’ve seen. I call them “AI Income Events” — and most investors miss them.
With these moves, you can pursue income far faster than simple buy-and-hold.
Many of my members are doing exactly that with a system my team built called Nexus, which helps us zero in on when a stock enters Phase 2—the growth phase.
Our mission is simple: maximize gains in AI stocks while the trend is alive and strong.
To illustrate the gains and associated timeframes that Luke targets with this stage analysis trading framework, he highlighted a handful of recent stock moves:
- AppLovin Corp. (APP) +500% in five months.
- SoundHound AI Inc. (SOUN) +300% in three months.
- Palantir Technologies Inc. (PLTR) +290% in five months.
- Super Micro Computer Inc. (SMCI) +233% in just two months.
- BigBear.ai Holdings Inc. (BBAI) +100% in weeks.
Back to Luke:
AI isn’t just another tool—it’s a multiplier,
It boosts efficiency, decision-making, marketing, product development, customer engagement—everything. Companies that adopt AI don’t inch forward – they leap.
(Disclaimer: I own APP.)
So, how do you find these Stage-2 trades?
You can do it by hand – pouring over thousands of charts, looking at moving averages, momentum indicators, and trade characteristics like volume – but this is unrealistic in a fast-moving market. It just requires too much time.
That’s why Luke created Nexus, a proprietary behavioral-analytics system that spots when a stock is about to enter Phase 2.
It scans thousands of stocks along with millions of data points to flag real-time breakouts across sectors (especially AI Income Events).
Back to Luke:
When Nexus lights up, behavior is shifting: Traders pile in, institutions move money, and Wall Street wakes up. If you’re positioned, you can ride the wave — potentially to 200%, 300%, even 400%+ gains.
Volatility isn’t a threat. With the right system, it’s your edge.
Luke is so confident in Nexus that he’s issuing a challenge…
Based on initial trade capital of just $5,000, here’s Luke:
The challenge is simple: Generate $30,000 in the next six months by targeting AI Income Events?
Over the next six months, I want you to see how AI Income Events can transform your portfolio.
Using my Nexus system, you’ll get alerts on exactly which stocks are entering Phase 2 and when to act.
Luke just put together a special free broadcast that reveals more about how Nexus works – and how it beats dividends, bonds, options, or any other “traditional” income strategy by 40X.
At the end of the day, Richard Dennis’s legacy reminds us that trading success isn’t about predicting every twist…
It’s about catching the tide when it runs.
Right now, that tide is undeniably bullish, with momentum surging through AI and tech.
Fundamentals still matter, but as Dennis and Keynes both warned, focusing exclusively on them will be counterproductive if they suggest battling against the prevailing current.
Luke’s goal with a stage analysis framework is simple: maximize trading gains while the bull is alive, then step aside before the bust.
More on this later this week. But to learn more now, click here.
Have a good evening,
Jeff Remsburg
