Fusion Investing: When Two Systems Are Better Than One
Sometimes, powerful results can emerge from combining two great things – especially when they seem like opposites.
Think about peanut butter and chocolate.
When combined thoughtfully, even contrasting elements can produce something far greater than the sum of their parts.
When the Broadway musical Hamilton debuted in 2015, it was revolutionary, wildly popular and extremely profitable.
The show was a cultural collision no one had seen before. One part was Broadway’s traditionally classical melodies and choreographed showtunes. The second was the energy and rhythmic wordplay of rap.
The result was historic. At its peak, the show set records for weekly earnings on Broadway. At one point, it grossed more than $4 million in a single week during the 2018 Christmas holiday.
Today, estimates are that it has earned more than $1 billion through its Broadway shows, domestic and international tours, merchandise, albums, and film.
The genius of Hamilton came from merging two worlds that didn’t seem to belong together — and that fusion created something extraordinary.
Investors can take a similar lesson.
What if, rather than sticking with just one market approach (despite a good outcome), combining two systems could deliver even better results?
We recently saw investing legend Louis Navellier combine his proven quantitative stock picking system with another that could lead to bigger gains … and I’ll share a pick today.
An AI Energy Winner
Successful stock-picking systems often stand out for their unique strengths.
Regular Digest readers know all about Louis Navellier’s system.
Louis’ stock grader system is built on quantitative rigor and high-powered computers. He has developed and refined this system over the past 40 years to pinpoint fundamentally strong stocks – the kind that big institutional investors invest in heavily.
In his Breakthrough Stocks service, Louis focuses exclusively on small-cap stocks that have excellent fundamentals and are starting to attract big money.
In March, Louis recommended Bloom Energy (BE), noting that it was poised perfectly to satisfy some of the energy needs of the AI revolution. Here is what he wrote when he recommended it.
Bloom Energy’s solutions ensure that the power is always on – and that’s why many big-name companies have already deployed the company’s platform. A few of Bloom Energy’s customers include Adobe, AT&T, Comcast, FedEx, Google, Honda, Intel, Lockheed Martin, Medtronic, Morgan Stanley, Panasonic, Staples, Target, Verizon, Walmart and Yahoo!.
You’re probably aware that a lack of reliable power is one of the biggest hindrances to the AI Revolution. Well, Bloom Energy is helping to solve this problem, as it has served data centers with reliable power for the past 13 years.
Louis monitors the market to find stocks that have only recently started to meet his Breakthrough Stocks standards and have big future growth potential. In other words, he only recommends companies right at the beginning of their growth curve, enabling investors to buy them before they shoot upward.
Since Louis’ recommendation, Bloom has gained more than 450% – in seven months.
BE is trading below Louis’ buy limit of $138, so there is still room left for this stock to run.
Louis’ 40-year track record of recommending high-quality stocks with institutional buying pressure speaks for itself.
So, what would happen if we added another layer to the equation?
Popularity Signals
You may not be as familiar with the success of Andy and Landon Swan, who publish with our corporate affiliate, TradeSmith.
The Swan Brothers’ Social Heat Score captures Main Street sentiment and social trend analysis; it’s a measure of the market’s emotional pulse.
The Swans have developed a system that pulls millions of data points from across the web – from social media posts to AI queries, search volumes to web traffic trends. They then combine these into a 0 to 100 score that measures company popularity.
These numbers are so critical that several Fortune 500 companies and several of America’s largest hedge funds pay up to $750,000 for their research.
One of their big winners included the sports-betting company DraftKings (DKNG). When DKNG went public in 2020 it immediately faced some headwinds caused by the Covid pandemic.
But by June 2022, things started to change.
The Swan’s system began to pick up signs that online sports betting was becoming rapidly popular. Plus, the online and social media comments about DraftKings were extremely positive.
They recommended the stock, and it went on to soar more than 200% in the coming months.
Seeking Superior Results
After meeting and discussing their systems, Louis and the Swans quickly realized that the Social Heat Score pairs perfectly with Stock Grader, which considers a longer-term outlook.
That was the idea … but would it actually work?
To find out, the TradeSmith team undertook a five-year backtest that showed more than 240 potential doubles, 12 ten-baggers, and an average gain of 244 percent – across every kind of market: up, down, and flat.
At their co-hosted event earlier this week, Louis and the Swans revealed that this new system is now detecting a divergence in the market. Some popular names could struggle in November, while a handful of new leaders are emerging fast.
If you missed the broadcast, the replay is still available for a short time.
In it, you’ll see exactly how this new system works and the kinds of signals that spotted BE and DKNG early. You’ll also get three free stock recommendations – two buys and one sell – that the experts shared during the event.
When you combine these two systems, the results are something that neither could achieve alone. Both systems are based on measurements … but of different factors affecting the market.
With this new strategy, you could find the next generation opportunities like this – possibly weeks, months or even years before the crowd catches on.
Click here to watch the replay while it is still online.
Hamilton took two successful forms and created something new with grand success. Like the fusion of Broadway musicals and rap, these two systems create something new for investors that can help build long-term wealth.
Enjoy your weekend,
Luis Hernandez
Editor in Chief, InvestorPlace
