More Articles | Free Reports | Premium Services Here’s a headline that should make you stop and think… From Bloomberg… Mom-and-pop investor sentiment has reached the highest level on record, surpassing what was seen during the meme-stock mania in 2021. Wall Street doesn’t always get it right. The Masters of the Universe often make a spectacular mess of things. But they’re known as the “smart money” for a reason. They have access to information the rest of us don’t. They have multimillion-dollar research budgets. They have sophisticated analytics tools. They get whisper numbers from CEOs. They’re paid to be in the know. The mom and pop investors… aka the “dumb money…” By the time the news reaches your barber, your mechanic, or that neighbor who borrows your lawn mower but can never be bothered to bring it back, it’s not exactly breaking anymore. So, whenever you see bullish sentiment among retail investors reaching an extreme level, alarm bells should immediately start ringing in your head. They’re always the last to the party – they jump in late once the money has been made. More worryingly, they’re also the last ones to leave. They’re the folks selling near the bottom of the bear market once the damage has already been dealt. So, what should we do as investors given that mom and pop retailer investors are foaming at the mouth over the prospects of making money in stocks? As we’ll explore today, this is when you want to listen to the sage advice of legendary investor Warren Buffett. Buffett is worth about $147 billion. And he didn’t make that staggering sum by following the crowd. As he puts it, you want to be “fearful when others are greedy, and greedy when others are fearful." | Recommended Link | | | | Legendary investor Louis Navellier’s stock rating system gave a buy rating to ALL of the top 30 performing stocks in the S&P 500 index of Trump's first term… ALL of them! His system is now rating these stocks as a “BUY” for Trump’s second term. |  |
Crowded Trade I’m not recommending you run out and dump your entire stock portfolio. The only successful doom mongers I’ve met made their money selling books or newsletters. You certainly don’t build a $147 billion fortune, like Buffett did, trading on doom. Fortune favors the optimists. And in the bulls’ favor, U.S. corporate earnings are strong… We’re in earnings season. Companies are reporting results for the fourth quarter of 2024. And it’s off to a strong start. So far, companies worth more than 75% of the S&P 500’s overall market value have reported. And earnings are on track to rise 14% year over year. This marks the sixth straight quarter of growing earnings-per-share (EPS) growth (a measure of how much profit is allocated to each share companies have issued). And it was the best quarter of EPS growth in three years. Good! Earnings growth is the engine that powers stocks higher. So, it’s great to see earnings in top shape. But you should still be wary of crowded trades. And make no mistake, this is an extremely crowded trade. Barclays analysis reveals that retail investors’ exposure to stocks is at its highest level since 1997. And data from the Fed shows that American households now have greater exposure to stocks than at any time in history. 
Meanwhile, Bloomberg reports that 70% of the retail buying following the short-lived tariff scare went directly into the Magnificent Seven tech stocks – Apple, Nvidia, Microsoft, Amazon, Google parent Alphabet, Facebook parent Meta Platforms, and Tesla. All of this buying has pushed valuations in these mega-cap tech stocks to levels we’ve never seen before. Not during the pandemic-era bubble… Not during the 1990s dotcom mania… Not in the lead up to the 1929 crash… Never. So, it’s no surprise that, while retail investors are piling into these stocks, the pros are moving on. | Recommended Link | | | | If you haven’t seen The Great American Crypto Project event, you still have time. This quant-based algorithm is designed to identify a predictable pattern where cryptos could soar 10X, 50X even 100X in 90 days or less. In-house crypto expert Luke Lango is predicting that President Trump is poised to issue 3 specific crypto policies during his first 100 days in office… igniting a crypto super cycle. And Luke just revealed the details on 3 coins he found with his proprietary algo that could soar in the coming weeks. Watch now. |  |
Follow the Money At our Freeport Alpha advisory, we base our trades on the MoneyFlow Indicator. It scans nearly 5,500 U.S. stocks every day, looking for the best of the best companies that big institutions are buying up in gobs. It then uses 80 complex algorithms to score and rank each one of them for strength across 29 factors. When a stock scores between 70 and 85, it tells us that institutional investors are buying the stock aggressively. A score of 85 and up tells the stock is a little overheated and due for a pullback. A score of below 70 shows a lack of interest from the big boys. And that’s a worry, if you’re piling into a Mag 7 stock along with the crowd. Take Apple. It scores 41 on the MoneyFlow Indicator. That’s a “no go” zone, as you can see below. 
And Apple isn’t alone. Microsoft and Tesla score just 38. Even Nvidia rates a middling 56. Alphabet is getting close to the buy zone, with a score of 65. But of the Mag 7, only Meta and Amazon are in the buy zone, with scores of 85. Again, this doesn’t mean you should dump your tech stocks and hide in a cave. But be aware that the crowd is greedy right now. And that’s a warning sign. So, keep your position sizes reasonable. No two investors are going to agree completely on what a “reasonable” position size is. But I generally don’t want to have more than 5% of my wealth in a single stock. Consider selling down your positions to a more manageable size if they’ve gotten to be disproportionately large. Also, keep an eye out for where the big money is flowing. Right now, it’s flowing into gold mining stocks. This has put most of the major players in the sector into our MoneyFlow sweet spot of 70-85. Out of respect to my paying subscribers, I can’t share with you the names of the gold mining stocks I’m recommending at Freeport Alpha. Or the one I’m sharing with Freeport Investor members later today. But if you want broad exposure to the sector, consider the shares of the VanEck Gold Miners ETF (GDX). It’s a basket of the world’s largest and most liquid precious metal mining stocks. GDX is up about 22% this year. And if money flows into the sector are any indication, it’s poised to go a lot higher. To life, liberty, and the pursuit of wealth, | 
