How to Beat the Market the Rest of the Year?

On Sep 25, 2021

The easy gains that came at the start of this new bull market are fading away fast. In fact the stock market (SPY) has become quite volatile with gains harder to come by. Gladly there are solutions as will be shared in this commentary to get you on the right path to outperform the market through the end of 2021 and beyond. Read the rest below.

There is not much argument these days about market direction. We are still in the early stages of a bull market as we recover from the devastations of 2020.

Let’s also remember that the average bull market lasts for over five years and the current one is only 18 months into its journey. So there is still plenty of time on the clock.

Unfortunately one should not fool themselves into thinking that the north of 100% gain since the beginning will be the pace of gains going forward. As we have seen the last several months gains have slowed down considerably along with an serious spike in volatility.

For some investors this means the solution is to buy index funds and let the chips fall where they may. However, for most of us, we want to find an edge to outperform to enjoy superior results. That is the focus of my commentary today.

Research Method 1.0

In order to tell you the solution, I first need to point out the problem. And that is the flawed way that most of us research stocks. For that purpose I will give you an outline on how the average person handles this vital task…then I will point out a better path.

Let’s say you read an article where some expert is touting 3 stocks they think are terrific. From there we will likely surf your favorite investment websites for additional information which is some combination of the following:

What does the company do? (Industry/Sector)
Review recent price action
Explore a few key metrics on growth, value or company financials
Read additional articles that tell us a bit more of the growth story for the company that gives us confident it is an attractive investment going forward.

So what’s the problem with this approach?

First it’s pretty time consuming as you realize this manual method will be applied to every stock under review.

Second, and most importantly, you are really not covering that much ground. Meaning there are literally thousands of data points that you could investigate for every stock to appreciate how healthy they are…and how they stack up to the competition.

Yet if we are being honest, this antiquated method only leads to a review of 5-10 aspects of a company before we decide to place a trade. It’s simply not a complete enough review to put the odds in your favor which leads to…

Research Method 2.0

The solution is to automate this approach. Like using computer models to scan more factors of these companies in milliseconds. This is why so many investors have turned to quantitative ratings as a means to find the best stocks.

In that realm our proprietary POWR Ratings model is helping thousands of investors do exactly that. To scan each…