In 2011, electric vehicle (EV) maker Tesla (TSLA) showed up on my “unbeatable” stock-picking system as a buy at $35 per share.
But here’s the thing… I didn’t buy Tesla when my system first flagged it in 2011. Since then, it’s skyrocketed over 7,000%. It’s one of the biggest mistakes of my investing career.
And today, I’ll share the four lessons I learned from missing out on Tesla – and how you can use them to find the next hot technology company…
The Big Money Loves Outliers
Most people don’t know this, but just 4% of stocks have accounted for nearly all the profits of the market each year (beyond Treasurys) for the past 100 years.
Now, I call these stocks outliers. The companies are unique in their business… grow sales and earnings at high rates… and have big profit margins.
Outliers are where the big money hides out. And to track big-money buying of outliers, I developed an “unbeatable” stock-picking system.
I used my experience from nearly two decades at prestigious Wall Street firms – regularly trading more than $1 billion worth of stock for major clients – to make sure it’s highly accurate, comprehensive, and effective.
It scans nearly 5,500 stocks every day, using algorithms to rank each one for strength. It also looks for the movements of big-money investors. And when it sees them piling into or getting out of a stock, it raises a yellow flag.
I put these yellow flags through another filter. If the flag turns red, it means the big money is selling. If it turns green, it means the big money is buying…
It’s that simple: When I see green, the big money is buying.
Recently, my system has identified hot tech companies like The Trade Desk (TTD) and SolarEdge Technologies (SEDG) for my Palm Beach Trader subscribers. And after taking their original investments off the table, as of this writing they’re up about 943% and 442%, respectively.
My system also flagged Tesla at $35 in 2011, as you can see in the chart below:
Now, you may be wondering why I didn’t buy TSLA even when my system flashed green. Let me explain…
The Trade That Got Away
Back then, I ran the equity derivatives desk for Wall Street firm Cantor Fitzgerald. During that time, I had the chance to visit one of Tesla’s first showrooms in Manhattan. I went with my top trading analyst, Lucas Downey.
Coincidently, that day is the same day my system flagged Tesla. And I said to Lucas, “Tesla showed up as a buy on the system today, at around $35. But I didn’t buy it.”
When he asked why, I told him it was because the company didn’t make money.
You see, for an outlier stock to make it from my system to my portfolio, it can’t just flash green. It also has to be a money-maker.
But after triggering my system, Tesla exploded past $60 in May 2013. And just four months later, the stock hit $180.
So my system was right about the big money flooding into the stock. Yet I had missed out.
And that’s when I learned a key lesson about investing in outliers…
Four Keys to Buying Outlier Tech Stocks
My system can identify 99% of outliers. And they almost always are money-makers. But sometimes, there’s an exception to the rule…
These companies are the outliers of the outliers. And they:
Have incredible products
Are spearheaded by visionary leaders
Develop solutions to major problems
Address key demands
Tesla fits all four criteria.
It has some of the best electric vehicles on the market. Founder and CEO Elon Musk is a creative futurist. Tesla’s products are helping solve the major problem of greenhouse gas emissions and sustainability. And the company is addressing a key demand: The EV market is expected to grow as much as 1,100% by 2030.
But sometimes, these kinds of outliers don’t make money right off the bat. In fact, it can take them years to make profits.
Take tech giants like Amazon or Netflix, for example. They fit the four criteria as well. And both also showed up on my system. But neither company initially made any money.
Again, I want my outliers to make profits. It just adds an extra layer of safety to the stocks we own.
But if you want to find superstar tech companies like Tesla, you also need to follow the four lessons I learned about tech investing. That’s why I added them to my unbeatable stock-picking system.
And it’s not too late to profit from the next outlier company. In fact, we believe the COVID-19 outbreak will create a massive surge of tech outliers – companies that will 10x, 100x, or even 1,000x your money.
All we have to do is follow the big money to them – and ride along for huge profits. That’s the recipe to getting rich in the markets.
Right now, we have over a dozen potential tech outliers in our Palm Beach Trader portfolio. And my finely tuned system is on the hunt for more. You can learn more about how it works right here.
Editor, Palm Beach Insider
P.S. My unbeatable system dominates the market without buying companies like Apple or Tesla. That’s because it’s able to find even better companies that the big money loves to hide out in.
These companies not only fit all the criteria that outlier tech stocks do, but they’re profitable too. Think of it as an added layer of security.
That’s how our Palm Beach Trader portfolio is sitting on a 91% win rate with an average expected return of 119% on our open trades. Index funds don’t come close to that.
I’ll show you how my system achieves success like that right here…