For the first time in history, the Dow hit 10,000.
It was March 1999. And it was all that the media, as well as traders on the floor of the New York Stock Exchange, could focus on.
That “magic” number of 10,000.
It was such a big deal the NYSE made up baseball caps commemorating the event.
I recently saw a few for sale on eBay for $180.
Here’s the Real Talk…
There’s nothing special about Dow 10,000 or Dow 40,000. Or with the S&P 500 trading at 5,000.
What’s really happening is “anchoring bias.” People anchor around big numbers. It’s attractive and exciting … but for no real reason.
We can all relate and understand it.
When we see something such as a new dress shirt we want to buy… If the suggested retail price is $100, and it’s on “sale” for $50, we think we are getting a great buy.
That’s because we anchored our decision on the $100 retail price.
Retailers have used this trick on shoppers for decades. They continue to use it because it works.
Humans are hardwired to make quick decisions in the face of loads of information. Anchoring skews our judgment and causes us to act in ways that are not rational.
And that’s also true when it comes to investing…
Beating the Bias with Profit Accelerator
Investors like to think they make rational decisions.
However, the facts show something different…
Investors act irrationally and make biased decisions. Like the anchoring bias … it’s one that I (and I’m sure, you) can relate to.
And that’s exactly why I built my new system Profit Accelerator.
By using this Nobel Prize-winning research, you can take advantage of investors’ biases.
Profit Accelerator takes advantage of a bias that is so strong, it’s almost impossible for investors to ignore — and that’s selling when a stock trades near or makes a new all-time high.
Instead of holding on to their winners, investors do the opposite — they sell their winners and hold tightly onto their losers.
The reason for that is the disposition effect … it feels good to take a profit.
Our System Spotted What Others Shunned
Investors are hesitant to bid stock prices higher even if the information warrants it!
Here’s a great example you’ve probably seen in the headlines recently…
Meta Platforms (Nasdaq: META) soared 20% after reporting their earnings last week.
Even though Meta’s stock price was higher by close to 180% over the past year before I added it to the Profit Accelerator portfolio, the stock was trading below the worth of the business.
Investors have an uneasy feeling buying a stock when it is making all-time highs and that prevents it from reaching its underlying worth.
Today, we sold one of our stocks — CymaBay Therapeutics (Nasdaq: CBAY).
CymaBay is a biopharmaceutical company focused on developing therapies for liver and chronic diseases.
Prior to adding it to the portfolio, CymaBay was up by more than 400% over the past year.
Our system was telling us that the share price should continue higher because the stock price was still trailing the underlying worth of the business.
We weren’t the only ones that believed so…
Gilead Sciences announced before the market opened on Monday that it will buy CymaBay for $4.3 billion, or $32.50 per share.
The stock soared 25% on the news.
We are selling it for a gain of 50%. And I sent a new recommendation to replace it.
It soared more than 294% over the prior year.
And Profit Accelerator is telling us that investors are too pessimistic despite the company’s strong fundamentals and that the stock should continue higher.
Still Beating the Market
Yesterday, the Dow dropped 525 points on hotter-than-expected inflation.
It was the ugliest day the market had seen all year.
Despite the carnage, all ten stocks in Profit Accelerator are up.
We’re 10 for 10.
Profit Accelerator doesn’t focus on the economy. In fact, legendary investor Peter Lynch said, “If you spend 13 minutes a year on economics, you’ve wasted 10 minutes.”
Instead, our system relies on data and analysis.
That’s why I’m not surprised that the entire portfolio is CRUSHING the market by 534%.
And that’s just the beginning…
Editor’s Note: Charles ran his Profit Accelerator system this morning. He sent a sell alert for one stock (for a gain of 50%!) and recommended a new stock that has momentum. It’s not too late for you to get the alert. Click here now for the details.
Regards,
Charles MizrahiFounder, Alpha Investor
