How I Helped Turn $600,000 Into $20 Million in Just a Few Years
A homeless-looking man with a thick European accent walked in holding a $600,000 personal check...
Editor's note: Today in the Chaikin PowerFeed, we're sharing a classic essay from Pete Carmasino...
Longtime readers might recognize it. This essay first appeared in the PowerFeed last year on April 19. But amid the recent chaos in the market, we're sharing it again as a reminder for finding opportunities where nobody might expect...
How I Helped Turn $600,000 Into $20 Million in Just a Few Years
By Pete Carmasino, chief market strategist, Chaikin Analytics
A homeless-looking man with a thick European accent walked in holding a $600,000 personal check...
Before that, I was having a normal workday in 1998.
I worked as a broker-dealer in those days. My company had several offices around the country. Our branches were typically in towns with a lot of high-net-worth residents.
Folks would often come in to talk. And we hoped they'd trust us to manage their money.
We would assign a "Broker of the Day" to chat with all the walk-ins.
That didn't happen when this homeless-looking man came in, though...
He was an older man – likely in his 70s. We could see his old Buick parked outside. And his tattered Members Only jacket and drab clothes made it seem like he didn't belong there.
The Broker of the Day didn't want to talk to this man. Nor did anyone else. They all thought this guy was homeless, crazy – or both. And they had trouble understanding him.
So as our branch's manager, I had to go over and meet with the man.
I invited him to chat with me in our conference room. I figured that I could hear his story in private, politely tell him we couldn't help, and walk him to his car.
My co-workers watched us through the glass windows. I could see them laughing among themselves about how they had stuck me with this man.
But I'm sure glad they did...
You see, if they had heard what I did in that conference room, it would've floored them.
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This man was far from homeless.
He had recently retired as a head scientist at ExxonMobil (XOM). He even showed me his old badge to prove it. He mentioned he still did some consulting work. But at his age, he wasn't doing much at all.
Truth be told, a part of me still didn't believe that the man's check was real.
But I wanted to do best by my potential new customer. So I opened his account and asked him how much he wanted to deposit.
That's when he handed me the $600,000 check.
The rest of the office took bets on whether the check would clear. A few days later, it did.
Here's where the story gets even more exciting...
About a year before the man came into my office, OPEC increased oil production by 10%.
The oil cartel made this calculated move as demand for oil was declining. And it was around the time of the Asian currency crisis. So the global markets were enduring a lot of volatility.
With more supply and less demand, oil prices plummeted...
In turn, oil stocks got crushed. It's hard to be profitable with oil at $10 to $12 per barrel.
Now, as a retired scientist at ExxonMobil, my new client knew the oil market better than anyone. And near the end of 1998, he called me from somewhere in the Middle East...
He had a laundry list of oil-related names. And he wanted to start buying when he returned from his trip.
I was shocked...
All the oil-related stocks looked terrible from a chart perspective. I didn't see anything except bad news ahead. And most of Wall Street was avoiding these names.
I tried to encourage the man to hold off. I thought we should wait for a better setup.
But just like the first day in my office, he wouldn't budge. Again, he was spot on...
The next big run in oil stocks began slowly. It wasn't a straight line up. And as you'll recall, at this point in the late 1990s, most investors cared more about the dot-com boom.
But by the end of 1999, oil prices surpassed their 1997 levels. Suddenly, oil traded at more than double its 1998 bottom. In turn, the prices of most oil-related stocks ripped higher.
And folks, the man and I weren't just buying a few thousand shares. We were taking portfolio-manager-sized positions. I'm talking about 10,000 to 50,000 shares at a time.
The firm I worked for, like most firms, had a floor broker. He represented our firm on the New York-listed stocks. I became his top broker in oil stocks at the New York Stock Exchange for a few days. And he made sure to have me call ahead to let him know I was "bringing size" to the market.
After all, I didn't want to move stock prices too much by just sending in a market order. Also, none of these stocks' market caps were as big as they are today.
The man's account grew from $600,000 to $20 million in just a few years.
It was a nerve-wracking experience. But it was also the most fun I ever had in the business.
In the end, I learned more about the mechanics of the markets from a man who walked in off the street than from anyone on Wall Street. I know that's hard to believe. But it's true.
You see, he told me one thing. With his strong accent, he said something like...
Peter, not you, or your children, or your children's children for the next several centuries, will run out of oil. The Earth is the largest producer of oil, not man.
There will never be peak oil.
Folks, the past five years have proved that...
The COVID-19 lockdowns halted business everywhere in the spring of 2020. As a result, the price of oil briefly went negative. And yet, not even that craziness could eliminate the stuff.
The fact is that we can't ignore energy-related names today – whether they're in fossil fuels or renewables. Our dependence on more power generation isn't going away. It's increasing.
That's why I pay attention to the energy and oil space. And I recommend you do so too.
Good investing,
Pete Carmasino Editor's note: When it comes to opportunities in this market, Chaikin Analytics founder Marc Chaikin is stepping forward with an urgent update...
In short, he sees a violent shift unfolding in U.S. stocks today. And he says it's opening up an incredible moneymaking opportunity for folks who understand what's coming... and how to position themselves.
On March 27, Marc is going on camera to share all the details. And his special broadcast is completely free to attend. All you need to do is register in advance – you can do so and learn more right here.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-0.07%
2
23
5
S&P 500
-0.29%
44
319
135
Nasdaq
-0.34%
8
71
21
Small Caps
-0.63%
209
1193
499
Bonds
+0.07%
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain Bearish. Major indexes are all bearish.
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+6.87%
Financial
+4.68%
Industrials
+3.25%
Real Estate
+3.1%
Information Technology
+2.75%
Utilities
+2.46%
Health Care
+2.21%
Consumer Discretionary
+2.15%
Communication
+2.11%
Materials
+2.1%
Consumer Staples
+0.04%
* * * *
Industry Focus
Pharmaceuticals Services
1
22
22
Over the past 6 months, the Pharmaceuticals subsector (XPH) has underperformed the S&P 500 by -1.25%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #19 of 21 subsectors and has moved down 1 slot over the past week.
Indicative Stocks
CRMD
CorMedix Inc.
ELAN
Elanco Animal Health
ZVRA
Zevra Therapeutics,
* * * *
Top Movers
Gainers
DRI
+5.77%
JBL
+3.12%
CHTR
+2.71%
ALL
+2.59%
AJG
+2.39%
Losers
ACN
-7.26%
IT
-6.82%
MCHP
-6.54%
CRL
-4.91%
EPAM
-4.75%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
Earnings Surprises
NKE NIKE, Inc.
Q3
$0.54
Beat by $0.25
LEN Lennar Corporation
Q1
$2.22
Beat by $0.51
MU Micron Technology, Inc.
Q2
$1.56
Beat by $0.14
JBL Jabil Inc.
Q2
$1.94
Beat by $0.11
FDX FedEx Corporation
Q3
$4.51
Missed by $-0.12
* * * *
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