Editor's note: The market has been on a tear... But Wall Street is still playing catch-up. And as we're about to hear from Keith Kaplan – CEO of our corporate affiliate TradeSmith – big money managers are finally feeling the "fear of missing out." In a recent article adapted from the free TradeSmith Daily e-letter, Keith explains that while this shift is another sign to be bullish today, you can do a lot better than waiting for the pros...
Wall Street's Top Analysts Are Feeling the 'FOMO' Squeeze By Keith Kaplan, chief executive officer, TradeSmith
When we talk about "FOMO" – the acronym for the "fear of missing out" – we're really talking about emotion-driven investing. We're talking about investors "chasing" stocks that are already hot... that are already off to the races. And we're usually talking about individual investors. Usually... but not always. Wall Street analysts are now giving in to FOMO. Let me explain...
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Analysts make their bones on their predictions – for company earnings, corporate share prices, and even targets for market indexes like the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite Index. So they look great when their predictions come true. But they look tepid or risk-averse when those targets for a stock get leapfrogged. Once that happens, these sell-siders are forced to play "catch up"... to "chase" stocks or the market. It's a true "fear of missing out" – so they have to create new price targets. It's happening right now. The rope-burning speed that saw the S&P 500 transition from bear to bull market on June 8 caught those investment-bank sell-siders by surprise. Their targets have been leapfrogged – and the FOMO pressure is building up. They seem out of touch with the markets. They're "leaving money on the table." They're getting calls from angry clients. And, rest assured, they're being pilloried by their bosses. We're now watching as analysts race to (in the jargon of Wall Street) "upwardly revise" their forecasts, with the S&P 500 already surpassing previous projections for the entire year. On July 20, the S&P 500 was higher than 22 out of the 23 year-end projections made in January that Bloomberg tracked. In a new round of revisions, one of the most bullish projection changes in terms of percentage came from the Switzerland-based global financial services firm Credit Suisse, hiking its 4,050 end-of-year S&P 500 target by 16% to 4,700. Research provider Fundstrat Global Advisors already had a bullish outlook for the S&P 500 with a year-end target of 4,750. But even those folks felt an upgraded target was warranted. Fundstrat's new end-of-year target for the S&P 500 is 4,825. It's not a bad thing to have extra confirmation of bullish outlooks... but there's a bigger lesson here. No matter what is going on, there are always bullish opportunities to make money... And you have an edge if you know where they are while everyone else is waiting on the sidelines for "confirmation" that now is the right time to invest. Don't wait for Wall Street. These analysts are beholden to their bosses. As an individual investor, you can be much nimbler when an opportunity comes along. So act first... and let others chase you. Regards, Keith Kaplan
Editor's note: Keith and the TradeSmith team have created a powerful forecasting system that can help identify moneymaking opportunities – before most folks catch on. It touches on a fast-evolving technology that's already transforming the investment world – artificial intelligence ("AI"). And if you wait to take advantage of it, you may risk being left behind forever... In our recent video, Keith and our experts at Stansberry Research discuss exactly how this AI application – which took more than six years, more than $18 million, and 50,000-plus man-hours to develop – could help you make MORE money, faster, and with LESS risk. Get the full story here. Further Reading After last year's pain, economic data is beating expectations again. That's great news for investors. According to history, times like these have led to significant outperformance in stocks... Learn more here. "You have to set aside your emotional reaction to a stock trading near its highs," Dr. David Eifrig writes. If you're like most investors, you probably start to worry after a major rally. But that's a mistake. In fact, you can make big gains by "buying high" – if you understand one secret... Read more here. |
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