Chief Investment Strategist, The Freeport Society
Ho ho ho.
Christmas came early this year.
The stock market had its best month of 2024, with the S&P 500 rallying almost 6% in November.
Now we’re just nine days into December, and the index has already hit a fresh high of 6,094.
It’s no wonder…
From deregulation to tax reform, President-Elect Donald Trump promises to reshape the U.S. economy through pro-growth policies. Those promises are stirring investors’ animal spirits… so the market continues to surge higher.
It’s not just the S&P 500 either. Since Election Day…
- The Russell 2000 index of small-cap stocks has surged about 9.7%
- The tech-heavy Nasdaq-100 has gained about 7.2%.
- And Bitcoin has also risen about 32% – from $70,000 to an all-time high of $101,399 on Saturday. (Members of The Freeport Investor who followed my advice to add Bitcoin to their portfolios as a hedge against dollar devaluation, couldn’t be happier. If they invested when I made the call, they’d be sitting on unrealized gains upwards of 133%.)
That’s all good and well, but can this red-hot rally continue… through the end of the year… through Trump’s inauguration… and beyond?
Let’s dig into that today and consider how you should position your investment strategy accordingly…
Now Is Not the Time to Set It and Forget It
The investment landscape has changed a lot over the past several decades. But most investors still believe in buying and holding stocks for the long haul.
So do I. That’s why our Freeport Investor model portfolio contains several stocks that we’ll hold long-term.
However, they form only a fraction of our overall investment strategy. We live in an Age of Chaos. So we apply a variety of tactics to ensure you’re dynamic enough to catch opportunities as they arise.
Doing anything less is insanity.
Market conditions are simply too fluid.
Consider 1962 to 1982.
During this two-decade bear market, the S&P 500 index (the blue line in the chart below) plummeted from 713 to 363, a nearly 50% decline.
Buy-and-hold strategies just didn’t work in that kind of an environment.
Source: Macrotrends.net
Indeed, not many stories of ordinary workers amassing multimillion-dollar portfolios through patient investing emerged during this era.
In fact, this period of stock market pain resulted in BusinessWeek’s now-famous “The Death of Equities” cover in 1979:
Investing in individual stocks during the 1960s and ’70s was challenging, even for expert stock pickers. Even seemingly safe, industry-leading companies underperformed.
Despite its prominence and innovation, tech pioneer IBM performance was cruddy. Between winter 1962 and fall 1981 – 19 years – IBM produced an average annual return of 2.62%. And that includes reinvested dividends.
Source: DQYDJ.com
A $10,000 investment yielding 2.62% annually over 19 years results in $16,346 — hardly enough for a comfortable retirement.
A similar years-long bear market hit in the 2000s following the dot-com boom and the financial crisis.
Am I predicting something similar now? No.
But I am predicting that we need to stay as nimble as possible so we’re ready for whatever the markets throw at us.
On this score, Freeport Society friend and tech-investing guru Luke Lango can help us.
How to Succeed in Today’s Market
There are many tools in our investing arsenal that we can use to stay agile in these unpredictable markets. Long-term investing is important, but so too is trading.
The problem is, far too many investors think of options when they hear the word “trading.” And they’ve been conditioned to fear options trading.
I’ve got good news for you.
They’re not the only trading tool available to you.
You can also trade stocks, which is what we do in my Freeport Alpha service. We buy stocks that meet the criteria set out in our MoneyFlow Indicator and we only hold them for as long as they can make money for us.
Now, Luke has developed what he calls the Auspex strategy that finds stocks to buy and hold for just 30 days at a time. (Go here now to sign up for Luke’s free Auspex Anomaly Event this Wednesday afternoon by going here.)
Auspex combines fundamental, technical, and market sentiment factors to identify the next month’s top-performing stocks.
At the start of each month, Auspex scans more than 10,000 stocks for those with the highest levels of fundamental strength, technical market direction, and positive market sentiment…
In other words, it identifies the stocks with the most upward momentum over the next month.
Typically, it finds 5-20 stocks.
Then, Luke and his team dig in to determine which of those will form that month’s Auspex Model Portfolio.
And it’s been going gangbusters since he started running this portfolio live with a small group of his members five months ago.
It’s been the market – sometimes by a wide margin – each and every month since then.
As I wrote earlier, November was a great month for stocks, with the S&P 500 rising around 6%.
But Auspex crushed it. Its equal-weighted model portfolio rose more than 8%.
This was the fifth consecutive month of market-beating returns for Auspex.
It gets better.
Back-testing shows Auspex outperforming the market by 10X-plus in trailing 5-, 10-, 15-, and 20-year windows.
In the April 2024 back-test scan, Auspex identified huge momentum pushing Dynagas LNG (DLNG) and Zeta Global (ZETA) higher.
DLNG stock popped almost 30%, while ZETA rose about 15%. Over that same stretch, the S&P 500 dropped about 4%.
In its May back-test scan, Auspex continued to highlight DLNG and ZETA. That month, ZETA soared more than 30%, while DLNG popped almost 10%. The S&P 500 rose just 4%.
To put it simply: Two Auspex stocks — DLNG and ZETA — rose about 40% and 50%, respectively, at a time when the market was basically flat.
The Bottom Line
In 2025, the Age of Chaos will continue… and the stock market is going to be volatile and complex.
In this environment, tools that provide data-driven, adaptive investment strategies will be invaluable.
That’s why we developed Freeport Alpha. And it’s why Luke and his team developed the Auspex tool and strategy… and why they’re launching a brand-new trading service that puts Auspex to use.
At Luke’s new Auspex Trader, investors will be able to position themselves to not just weather potential market storms but to thrive and potentially achieve returns far beyond market averages.
To learn more, just click here to sign up for Luke’s free Auspex Anomaly Event this Wednesday, December 11, at 1 p.m. Eastern.
Remember, adaptability is the name of the game in this Age of Chaos.
To life, liberty, and the pursuit of wealth.