How to Beat Wall Street’s Manic Crowd
Listen to the audio version of this article (generated by AI).
Whenever something dramatic happens, a lot of folks like to go on TV and play the “blame game.”
It can get very philosophical. But I’ll let you in on a secret: At the end of the day, the culprit is almost always the same…
Emotions are what’s driving our behavior.
That’s true today, and it was true in 100,000 B.C.
Imagine you and your hunter/gatherer tribe are out and about… moving to a place with more fresh water.
On your way, you see three dozen terrified members of your neighboring tribe running for their lives. It’s a human stampede.
Your instincts will tell you to run like the wind. Your instincts will say there’s a good reason three dozen people are running for their lives. It doesn’t matter if you can’t see a saber-toothed tiger or a rival tribe with spears… you just know it’s time to run.
This reason – survival – is the core reason why humans find comfort in crowds. It’s how we survived in the wild and became the dominant species on Earth. To this day, we know having your own crowd – your family, friends, and coworkers – leads to longer, better lives.
However, the desire to be part of a crowd can kill your stock portfolio.
We need look no further than how Wall Street responded in early April 2025, when President Trump unveiled his “Liberation Day” tariff plan.
The crowd panicked.
On Thursday, April 3, the Dow dropped 1,679 points. The S&P 500 sank 4.8%. The NASDAQ fell 6%. It was the worst day for the major indexes since the COVID-19 crash.
However, I repeatedly told investors to stand pat and wait out the storm; the market would bounce back. The reality is Wall Street is a manic crowd and it likes to “react” first and “think” later.
This proved to be the right call.
Just days later, President Trump announced a 90-day pause on most reciprocal tariffs. Stocks exploded higher. The S&P 500 jumped 9.5%, its best day since 2008. The NASDAQ surged 12%, its best day in 24 years. And the Dow jumped nearly 3,000 points.
By late June, the S&P 500 and NASDAQ were back at all-time highs.
Investors who sold in the panic missed one of the fastest rebounds in market history.
Going your own way can save it.
The reality is that the human brain is a marvelous tool for creating art, music, language, and engineering feats, but it’s a terrible tool for investing.
The more you know about the workings of your own mind, the “bugs” inside it, and how they work against our investment performance, the more you can develop strategies to mitigate the negative effects of those bugs.
In today’s Market 360, I’ll explain Crowd-Seeking Bias, how it works and how you can neutralize its negative effects. Then, I’ll show you how my Precursor Intelligence system can help you sidestep costly investing mistakes… and zero in on stocks with the best chance of delivering market-beating gains.
The Problem With Crowd-Seeking
A lot of you are probably fans of momentum investing. The truth is, I am, too. You always want to capitalize on a trend, and trends are made up of people.
But while following the crowd CAN result in great momentum plays… you don’t want to do so blindly.
The crowd-seeking I’m talking about – follow the herd, think later – is responsible for a lot of failed investments. It means you won’t pick up on a shift in the trend. So, you’ll get your timing all wrong. You’ll often end up buying near the highs and selling near the lows.
With Crowd-Seeking Bias, even the best investing ideas can become a losing proposition.
The flip side is to be a contrarian. In other words, to buy the dip and sell the highs.
As I mentioned, though, it goes against our instincts. That’s why everyone isn’t Warren Buffett. But you can get his level of returns (or better) by checking your emotions at the door – and sticking with a pattern that works.
The premise is simple.
Look Off the Beaten Path…
There’s an easy way to resist our tendency for crowd-seeking, and it’s to look for buys where nobody else is looking.
It’s a lot easier to go your own way when nobody else is there to influence your decisions.
In other words, look for a company that gets little to no mainstream attention.
A company that doesn’t get fawning coverage on CNBC or on the internet.
But one that’s still growing like crazy – in terms of sales, operating margins, and especially earnings.
Whenever its stock experiences a sell-off… then that’s a great opportunity. And those fundamental factors are exactly what I’ve designed my P.I. system to detect.
But again, you only want the highest-quality companies.
Then you can shift the engine into reverse, too. When an investment starts to slip on these factors, it’s time to sell. (Especially when the crowd hasn’t caught on yet.)
In total, there’s 8 factors to look for. Apply them to fundamentally superior stocks, and that’s the basis for my Precursor Intelligence system.
Once you have these 8 precursors in mind, the results can be phenomenal. For example…
Take Sezzle Inc. (SEZL), for example.
Most investors had never heard of it.
It’s a small buy-now-pay-later credit company. It wasn’t being covered by CNBC. It wasn’t one of the same crowded AI names everyone was chasing. And it certainly wasn’t the kind of stock most retail investors were talking about.
But in early September 2024, my P.I. system identified a major shift in the stock’s ownership structure.
The “elephants” were moving in.
In other words, large institutional investors were quietly accumulating shares before the crowd caught on.
So, after doing my own vetting, I recommended Sezzle to my members.
In less than a year, they had the chance to capture a 555% gain.
That’s the power of going where the smart money is moving before the crowd gets there.
Precursor Intelligence Presentation Now Available
Operating margins, sales metrics, earnings projections…it all sounds pretty boring, I know. That’s exactly the point.
These factors don’t activate your feelings. They do activate something much more important: the system behind Precursor Intelligence.
Not a lot of people take the time to assess stocks this way – much less all 8 factors. So, it’s a great way to beat the Crowd-Seeking Bias we discussed today…and end up with better gains in half the time.
If you want to learn more, go here for the Precursor Intelligence recording and transcript. Besides the glimpse at my system, I even reveal my No.1 stock pick. Click here for details.
Sincerely,
Louis Navellier
Editor, Market 360
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Sezzle Inc. (SEZL)