Rachel’s note: Here at Casey Research, we’re contrarians. We look for outliers in the market… and use them to profit before the mainstream catches on. It’s how we beat Wall Street at its own game.
So today, we’re sharing insights from a proven expert on finding outlier investment opportunities…
His name is Jason Bodner. He spent decades developing a proprietary system that finds the best outlier stocks on Wall Street. But even better, this system can detect when massive institutions and hedge funds place their stakes.
His mission now is to uncover the household names of tomorrow, long before anyone in the mainstream financial media. And so far, his system has handed his readers gains like 244%, 391%, and even 743%.
Now, he’s teaming up with our friend and tech expert over at Brownstone Research, Jeff Brown, to bring this system to the world. Just go right here to catch up on their exciting announcement… and learn Jason’s top five outlier stocks to have on your radar, completely for free…
By Jason Bodner, editor, Outlier Investor
In statistics, an outlier is a data point that differs significantly from other observations. That’s why outliers are often excluded from data sets. They can muddy an otherwise clear picture.
Imagine your kid feels sick. You measure their temperature with a touchless thermometer. The first reading says 99.2⁰… a little high, so you do it again. The second reading says 145⁰… obviously wrong. So, a third and fourth time each says 99.2⁰. You obviously throw out the outlier in this case.
This makes sense in most scientific scenarios. But it doesn’t always…
Tom Brady, quarterback for the Tampa Bay Buccaneers, has been to 10 of the 55 Super Bowls in history (18% of them). As of the most recent Super Bowl, he’s won seven of them (13%). And he’s only been playing football professionally for 21 of them. That means he’s won one-third of the Super Bowls he’s seen in his career.
That is a statistical outlier: a clear deviation from all other quarterbacks in history. But do you throw him out of the data set? Absolutely not. In this instance, Brady becomes the data point to pay attention to.
So, it doesn’t always make sense to exclude the outliers. In fact, in my own career, I don’t throw out the outliers at all. On the contrary: I throw out everything but the outliers.
My Outlier Mission
You see, the outliers I focus on are outlier stocks. These are the stocks that outperform every other. The ones that – whether you realize it or not – carry the whole market on their back.
And I built a unique algorithm that uncovers these outlier stocks. It picks them based on a few key factors: fundamental strength, bullish technical patterns, and most importantly, unusually large volumes of buying. This volume tells me a major Wall Street institution is getting involved – what I call the big money.
These filters narrow down the entire stock market universe to just 20 names, each week. And from that, I start digging for more info to find the absolute best stock to buy.
These stocks have gone on to hand me – and my readers – unthinkable gains. Since I started publishing my ideas to a small group of subscribers, I’ve posted a 91% win rate, with an average position return of 126% and open gains as high as 1,000% in just a couple years. (And that’s after recommending closing half the position to ride the gains for free.)
That’s why, when it comes to stocks, I say keep the outliers and forget everything else. And I’m not the only one who thinks this way…
Hendrik Bessembinder, a professor of finance, agrees. In 2017, he wrote a paper titled “Do Stocks Outperform Treasury Bills?” In it, he studies more than 26,000 stocks over 100 years’ time.
Boiling it down, he found that since the 1920s, only 4% of all stocks accounted for 100% of the gains of stocks over Treasury bills. And only 1% of stocks accounted for 50% of the gains of stocks over Treasury bills.
Statistically, this tiny number of stocks is outliers. They would be ignored in traditional analysis.
But in doing so, an investor would throw out any practical chance of beating the market. So that’s why I’ve devoted my career to finding this 4%, and reaping the rewards…
How I Spot the 4%
Let’s take a look at one of the top outlier stocks: Nvidia (NVDA).
It appeared on my weekly quant-generated buy reports 77 times since the year 2000 – including backtested data.
And even more impressive, it’s appeared in 53 weekly reports out of a possible 345 since I formally started publishing data science on stocks in 2014. (345 weeks have passed since July 1, 2014 when I made this my official life’s work.)
NVDA has naturally been a big winner since its first appearance on my live reports. It’s up 2,680% since then. That includes trade war fears, volatility product blow-ups, and a pandemic!
Here’s a chart of each NVDA buy signal, including backtested data shaded gray.
Here’s my point…
When it comes to analyzing stocks, not only should you keep the outliers – you should toss everything else. That’s where the real money is… Bessembinder proved it!
Using data science completely changed my investing career. It taught me the true path to independent wealth – buying and holding outliers like NVDA for consistent, outsized returns. Like Tom Brady, outlier stocks just keep winning… regardless of what the market does.
In such volatile markets where opportunities zip by every day, one can easily get overexposed to stocks with unclear direction. Following this system is what got me free of that, and got me adding zeros to my brokerage account.
And on Friday, I hosted my Outlier Investment Summit to show you exactly how I achieved this – starting with just a humble salary and a big idea.
And to prove to you how confident I am in my system, I even gave away my most recent top five watchlist of outlier stocks – completely free. If you missed it, don’t worry. I’ve made a replay available for you right here.
Editor, Outlier Investor