This 'Super AI' Shatters Wall Street's Favorite Myth
byCOVID-19-
Editor's note: A lot of folks wrongly believe you can't beat the market... But loyal Chaikin PowerFeed readers know that's not the case. You just need the right tools and approach to do it.
Editor's note: A lot of folks wrongly believe you can't beat the market...
But loyal Chaikin PowerFeed readers know that's not the case. You just need the right tools and approach to do it.
Today's essay comes from Keith Kaplan, the CEO of our corporate affiliate TradeSmith...
Keith has worked for 25 years as a software architect. And at TradeSmith, he's leaning on that experience to unleash the power of his firm's software for the everyday retail investor.
As you'll see, Keith takes a similar approach to us at Chaikin Analytics. In this essay, he'll show you how TradeSmith is using AI to empower investors to make market-beating gains...
This 'Super AI' Shatters Wall Street's Favorite Myth
By Keith Kaplan, CEO, TradeSmith
The organizers billed it as an academic debate, but it felt more like a heavyweight bout...
On May 17, 1984, Columbia University marked the 50th anniversary of Benjamin Graham and David Dodd's Security Analysis – the bible of value investing – with a debate between two different perspectives on investing.
At one podium stood Michael Jensen, a rising star from the University of Rochester. He carried the weight of a near-unanimous academic consensus – the efficient market hypothesis ("EMH").
It claimed markets were unbeatable... that what looked like investor outperformance was nothing more than statistical noise.
On the other side was one of the world's most successful investors, Warren Buffett.
Nineteen years earlier, Buffett had taken over a failing New England textile mill called Berkshire Hathaway. By applying Graham and Dodd's principles, he'd transformed it into one of the world's most successful investment firms.
Jensen spoke first. He cited studies showing that, taken as a whole, the pros weren't beating the market.
To support his point, he used the example of a national coin-flipping contest in which folks predicted whether their coins would fall on heads or tails. If 225 million people did this, he argued, a few would guess correctly 20 times in a row. There's no skill required – just the law of large numbers at work.
Then it was Buffett's turn...
"Let's accept Professor Jensen's coin-flipping contest," he began. He walked through the same logic – millions flipping coins, losers dropping out, and a tiny remnant surviving 20 rounds.
Then he reframed the question...
"But what if those survivors all came from the same place?" He let the pause hang... "Graham-and-Doddsville."
Buffett was referring not to an actual place – but to a school of thought. He showed slides of nine funds, each run by Graham disciples, all with years of outperformance. You can dismiss one streak among this group as chance... but not nine.
For decades, academics like Jensen told investors that beating the market was impossible. At TradeSmith, we've set out to prove otherwise – not with luck, but with discipline, data, and world-class software tools.
Our latest breakthrough takes the core math behind the EMH and turns it on its head – creating a system with a real, lasting edge...
The man who announced that "historic volatility is coming" three months before the 2025 crash and rally has a new prediction. "October 22 could spark a financial panic in the U.S.," he now says. He's not predicting another tariff crash... a recession... or anything of the kind. Instead, he has a far more peculiar warning for the rest of 2025. By tomorrow, click here for his full blueprint and two free recommendations.
Marc Chaikin, the Wall Street legend followed by more than 800,000 readers in 148 countries, just went public with his newest trade... and it will surprise you. Get the full details – for FREE – right here.
Don't Settle for Average Returns
In back tests, our system delivered an average annual return of 374% over five years – a period that includes the COVID-19 pandemic, the 2022 crash, the ongoing trade war, two wars, and wild swings in interest rates.
And it's powered by something investors in 1984 could only imagine in science fiction...
Artificial intelligence ("AI").
You're probably familiar with ChatGPT, Gemini, and Copilot. They're called large language models because they're trained on massive datasets of words.
Think of our AI-powered trading system as a "large numbers model."
We trained it on more than 100 billion stock market data points – including odd jumps and volatility spikes. It learns patterns hidden in the noise, then projects where stocks are likely to move next.
You may wonder how accurate these projections are. We monitor it daily and see surprisingly consistent results...
Some stocks hit their price projections more than 90% of the time. That covers more than 700,000 projections a month since we introduced the model in 2023.
And we consistently see 70% accuracy or higher. That's even more impressive than residents of "Graham-and-Doddsville."
For instance, on July 27, 2023, our model predicted Opendoor Technologies (OPEN) would soon hit $4.87 per share.
Twenty-four hours later, the stock hit that price... And my team booked a 9.4% gain. That's like growing your money 34 times in a year.
And you could've boosted that gain to 244% in just 24 hours with a special kind of trade.
Another example is restaurant chain Wingstop (WING). On June 4, our AI projected a 74% chance of it rising over the next 21 days to hit $384.87 per share.
Wingstop reached that price within 24 hours. You could've booked a 3.6% gain... and boosted it to 156%.
Or take Tesla (TSLA). In May, our model projected that the electric-car maker would hit $302.89 per share in 21 trading days.
It reached that price even faster than expected. We booked a 5.2% gain in 24 hours, which you could've boosted to 310%.
These gains are great. But my team and I wanted to make this technology even more accessible to everyday investors and even more powerful.
That's where our EMH math breakthrough comes in...
It turns the core mathematical concepts of EMH against itself.
The math is called mean-variance optimization ("MVO"). It's mostly used to minimize risk while holding a broad, market-based portfolio.
Our team used the same formula not to spread bets, but to concentrate capital into a handful of stocks with the highest potential payoff.
The chart below shows what happened when we applied our MVO model to the tech-heavy Invesco QQQ Trust (QQQ).
The blue line shows $10,000 invested in QQQ since January 2018. The orange line shows $10,000 put into the top five QQQ stocks selected by our MVO model on the same date...
The MVO-selected five stocks outperformed QQQ by 3-to-1.
But our team is never satisfied. And impressive as this was, it still wasn't good enough. We then found a way to apply our MVO model to the stock projections our AI makes.
The result is our "AI Super Portfolio."
As I mentioned, it returned 374% per year on average in a five-year back test. But that's just an average.
Last year, it returned 602%.
That's more than 30 times the return you'd have gotten holding the S&P 500 Index for the year. And it's more than triple the return of Nvidia (NVDA) over the same period.
Even better, our system is easy to follow. You hold the five top stocks based on our AI's projections. Then, you rotate into a new set of five stocks when the AI says it's time to sell.
That's it... There's nothing more to it. It takes no more than a few minutes, on average, once a week to maintain.
It never sat right with me that Wall Street and the index-fund industry peddle the myth that the market is unbeatable.
But the sad truth is that millions of regular investors are happy to settle for average returns.
That allows fund managers to sit on their hands and get rich on fees.
It's great news for folks on Wall Street. But it's also one of the biggest scams in the market today – one that my team and I at TradeSmith are on a mission to combat.
The markets aren't unbeatable. You just need the right tools.
Regards,
Keith Kaplan Editor's note: Keith and his TradeSmith team have designed this powerful new form of AI to help everyday investors like you...
According to Keith, this AI can foresee the future prices of 2,334 stocks with 85% back-tested accuracy. It's the most lucrative new investment vehicle in his firm's 20-year history.
And on October 22, Keith and his team believe their new "Super AI" will expose a massive anomaly in the stock market that could quadruple your portfolio. Get all the details here.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.48%
7
16
7
S&P 500
+0.57%
103
271
129
Nasdaq
+0.66%
30
49
21
Small Caps
-0.67%
427
1102
390
Bonds
-0.15%
Consumer Staples
+1.33%
2
13
22
— According to the Chaikin Power Bar, Small Cap stocks have become somewhat more Bullish than Large Cap stocks. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Real Estate
+3.34%
Consumer Discretionary
+2.48%
Information Technology
+2.38%
Consumer Staples
+2.09%
Communication
+1.9%
Utilities
+1.52%
Industrials
+1.22%
Materials
+1.19%
Energy
+0.89%
Health Care
+0.82%
Financial
+0.04%
* * * *
Industry Focus
Pharmaceuticals Services
18
23
10
Over the past 6 months, the Pharmaceuticals subsector (XPH) has underperformed the S&P 500 by -0.75%. However, its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #10 of 21 subsectors and has moved down 1 slot over the past week.
Top Stocks
ESPR
Esperion Therapeutic
AMRX
Amneal Pharmaceutica
ARVN
Arvinas, Inc.
* * * *
Top Movers
Gainers
KVUE
+8.36%
AXP
+7.27%
GILD
+4.21%
EL
+4.11%
COF
+4.03%
Losers
NEM
-7.63%
ORCL
-6.93%
VST
-4.3%
MRNA
-4.16%
IBKR
-3.34%
* * * *
Earnings Report
Earnings Surprises
HBAN Huntington Bancshares Incorporated
Q3
$0.40
Beat by $0.03
TFC Truist Financial Corporation
Q3
$1.06
Beat by $0.07
FITB Fifth Third Bancorp
Q3
$0.93
Beat by $0.06
RF Regions Financial Corporation
Q3
$0.63
Beat by $0.03
STT State Street Corporation
Q3
$2.78
Beat by $0.13
* * * *
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