How to Spot Crowded Trades… And Avoid Them Like the Plague

If you have followed me at all over the years, you know I pay pretty close attention to the quarterly filings of leading hedge fund managers and institutional investors.

Back in the Stone Age when I began doing this, we didn’t get immediate access to the filings. You had to write into the SEC and have them mailed.

Eventually, Henry Emerson, the publisher of the Outstanding Investor, began producing a report each quarter that would come a few weeks after the filings deadline, so we all signed up for it.

Knowing what the very best and brightest of America’s investors were buying and selling was a substantial informational advantage back then.

Of course, the advantage that comes from tracking these leading investors is gone now. The filings are live online seconds after being received at the SEC, and some paid sites have the analysis up in minutes. At worst case, the Nasdaq site has all the info up within 24 hours.

The advantage of having information no one else does, like so many stock market advantages, has been eliminated by the widespread availability of information.

Rather than providing an advantage, this widespread availability of information leads to crowded trades.

That’s why we have to rely upon a totally different approach nowadays…

Ignore Hot Predictions on Cannabis, AI, and Crypto. Bring Home Great Profits Instead

It’s the season at last.

We put away the tools and fixings of Thanksgiving and its onslaught of people and food. Black Friday and Cyber Monday, which you are lucky if you were able to avoid, are now also behind us. Next up are the Christmas decorations and festivities.

But this also marks the beginning of another season that is much less fun.

Perhaps like me, you also received your first business magazine with bold predictions about 2019 this past weekend. This is just the first of many such publications and broadcasts we will have to endure for the next 8 weeks. Prediction season starts at Thanksgiving and runs through the final edition of Barron’s Market Roundtable in early February, so it’s a long battle.

There will be talk about the cannabis revolution, the rise of the artificial intelligence, the opportunities in cryptocurrency, the increase in driverless electric car, the emerging dominance of wind and solar power, promise of big data, and all the glitz and glam of wearable technology, as well as a host of other hot trend predictions.

That’s why today I want to give you my best advice, so that you can more easily navigate these dangerously alluring times.

Let me explain