Legacy Research Group

Were you brave enough to buy stocks last March?

Were you brave enough to buy real estate stocks last March?

And were you brave enough to buy bank stocks at any point last year?

Not many were.

If you didn’t, you have no reason to feel ashamed.

But one man did. He bought stocks (or, told his subscribers to, anyway). Not in just one of those categories, but in all three.

No big deal? Only if you’ve forgotten just where markets were last March. So, how did those trades play out, and what’s coming next (not to mention the identity of this mystery man), we’ll show you below.

First, let’s check out today’s market action…

Market Data

The S&P 500 closed up 0.8% to end the day at 4,995.06.… the NASDAQ gained 1% to close at 15,756.64.

In commodities, West Texas Intermediate crude oil trades at $74.09, up 61 cents…

Gold is $2,050 per troy ounce, down $1…

And bitcoin is $44,170, up $984 since yesterday.

Now, back to our story…

He Was Just Crazy Enough to Buy Stocks

Today, as we write, the S&P 500 is at 4,995. Just five points short of 5,000 points.

The index has never traded above that level, let alone closed above it.

But March 2023 was a different story. The index traded below 4,000 points… it was only 10% above the October 2022 low (incidentally, the starting reference point for our Legacy Annual Report Card).

At the same time in March, several banks had collapsed during the previous month… and all the economic commentary was about when a recession would happen, rather than if it would happen.

Despite that, one gentleman told us that it was the perfect time for him to launch a new trading service with Legacy Research.

Not only that, but he was prepared to get on camera and guarantee the U.S. wouldn’t go into a recession… and that stocks wouldn’t crash… not in 2023 anyway.

Remember, the technical definition of a market crash is a 20% peak-to-trough fall during the cycle.

With the benefit of hindsight, it doesn’t sound like such a big deal. But think back to that time. Banks were failing, the Federal Reserve was well into its interest-rate-rising cycle, inflation was high, and companies were cutting costs.

But for the gentleman in question, it really wasn’t a big deal. The gentleman is Phillip J. Anderson.

The reason he was willing to make those recession and stock market guarantees is because Phil uses the decades of knowledge he has built up to know exactly how economic and market cycles work.

And it all leads back to what Phil refers to as the 18.6-year real estate cycle.

Phil says everything that happens in the economy and the markets is entirely predictable… because being cycles, they repeat.

That’s why Phil was so confident. He knew that at that point in the cycle, some banks would face trouble. He knew that at that point in the cycle, the U.S. economy wouldn’t go into recession… not until 2025/2026.

Meanwhile, every other economist on Earth said a recession was 100% certain in 2023.

Every Economist Got It Wrong, Except Phil

That’s also why Phil felt comfortable recommending a housing stock, M/I Homes (MHO). That clocked a 51.7% gain in six months.

And a few months later he even backed JPMorgan Chase & Co (JPM). Ultimately, that trade didn’t work out for Phil. His rigorous stop-loss policy knocked him out of the trade.

But his intuition was right. The stock is up 22% since then. But heck, you can’t win ‘em all.

And right now, Phil is putting his neck on the line again. This time, rather than backing stocks at the bottom of the market… Phil’s backing them at the top of the market.

It’s almost the same fear, whether markets are high or low. Most investors let their emotions get the better of them. When stocks are low, most investors are worried they’ll go lower.

When stocks are at a new high (and we’re at record highs now), those same investors are worried it’s all about to turn and crash.

Meanwhile, here’s Phil Anderson… telling you the market isn’t about to fall… not perhaps for another two years.

He’s so convinced (again) that he’s getting on camera tomorrow to explain exactly why… the 18.6-year cycle, and what this means for stocks over the next two years.

It’s part of what Phil calls the “final stage of the melt-up.” If you want to give yourself an advantage by knowing where the market is headed next, you’ll do no better than listening to Phil Anderson.

To make sure you have the chance to watch Phil’s presentation, go here now.

Report Card – Final Part This Friday

A quick reminder that this Friday we publish the final part of the Legacy Research Annual Report Card. This section will include our shorter-term trading services.

This coming group has probably been the most difficult, in terms of the number-crunching required.

But we’re just about there and expect to have the full analysis complete and ready to publish on Friday afternoon. Look out for it then.

If you’ve missed the first two parts, you can read Part I here and Part II here.

The Winners Circle

The Winners Circle is an occasional feature in The Daily Cut, where we showcase closed winning trades from our stable of experts.

We’ll typically publish these one or two days after they’re published in the individual publications. That gives paying subscribers enough time to exit their positions.

You won’t see this feature every day in The Daily Cut, as it’s not necessarily every day that our publications close out gains.

But when they do, we’ll highlight them here.

Just note, from time to time, we’ll withhold the name of a sell recommendation if it was only a part-sell. That may be an occasion where the expert has recommended subscribers to sell enough to cover their initial stake.

This is what we call a “free ride.” That’s where after an investment doubles, you sell half, effectively meaning you’re playing with “house money” on the remainder of the investment (of course, that doesn’t factor in any tax liability you may have from selling).

Anyway, we hope this gives you a little more insight into what’s happening around Legacy Research.

If you subscribe to these services and you’ve profited from these gains, we’d love to hear your story. Write to us at feedback@legacyresearch.com and type “Winners Circle gains” in the subject line.

Mailbag

In the January 24 issue of The Daily Cut, we included a big gain in our “Winners Circle” segment.

As it happens, this gain wasn’t without controversy. It led to a number of emails from subscribers of the Strategic Trader service.

And so, in the interest of full disclosure, it’s only right that we provide more context to that position in these pages.

We start with a note from one of the subscribers, Jon W.:

I am new to your Strategic Trader service.

The day you published the January recommendation, I read your analysis, went to my broker’s site, and tried to make a warrant purchase as you recommended. You said to set a buy limit at $0.50.

What I found was a buy-and-sell trade range of $1.50 to $2. I have tracked the price since then and have watched it continue to rise, never coming down below $2.

I feel really ripped off. Now you get to tout this wonderful 1,000%+ gain, but I am left out in the cold. I would like to know how many of your subscribers were actually able to make this “wonderful” trade.

It’s not like I waited days to try and execute this warrant trade. I only waited the time it took me to read your January publication. Maybe because I am on the West Coast I am at a three-hour handicap. I read your recommendation, tried to follow it, and had absolutely no chance.

I have signed up for executive status ($3,000), and I feel that I have been taken for a “not-so-free ride.” This trade will look wonderful in your portfolio, but to me, it will always leave bile in my throat.

Your no-refund policy has left me with little recourse. I have been a subscriber to your basic service for many years, and I expected respectable service from you here.

I am tremendously disappointed. I hope to receive a response in the near future.

Very unhappy in California.

And now for the full background and explanation from analyst, John Pangere, which he published to Strategic Trader subscribers on January 30:

On January 24, we sent a profit alert for the Osisko Development Warrants (ODVWZ).

We recommended the warrants on January 10 as a way to play the coming gold bull market. In our initial writeup, we told you we expected to see at least triple-digit gains from the warrants. The next day, the warrants went flying.

We know the reason why: volume shot far higher than expected. And that created a feedback loop with demand for the warrants far outpacing the supply at the time.

Now, this isn’t the first time this has happened after one of our recommendations. However, in most cases, the warrants tend to come back below our buy-up-to price. And while there was a selloff in the following days, it wasn’t enough.

In the following weeks, buying pressure kept going. That’s not something we normally see.

So, on January 24, we recommended taking a Free Ride on the warrants. At the time we sent that profit alert, we were up 2,650%.

We know some subscribers were able to buy the warrants. We also know some of you were not able to buy them. And we’ve gotten letters mainly from subscribers who did not have a chance to participate in the rally.

We can’t respond to your emails or phone calls directly. But we wanted to take a moment to address one of the more passionate letters we received. [The email printed above from Jon W.]

[…]

This shouldn’t have happened. And it’s not my intention to ever see anything like this happen.

In hindsight, the limited trading history of these warrants and lower average volume were too little for our current subscriber base. And while I did flag this as a potential issue in our initial writeup, this hasn’t been much of a problem in the past.

But as we’ve grown over the five years since launching this service, so has our subscriber base. What this means is that as we grow, we need to adjust our universe of warrants that we’re able to recommend. Simply put, we need to focus only on those warrants that we think can handle a greater volume of trading activity.

So, in fairness to those who weren’t able to participate in this trade, we won’t count this Free Ride in our official track record. However, we’ll continue to track the warrants for those of you who continue to hold them.

In addition, I think this is also an opportunity to review what we mean when we give buy-up-to-price guidance. Something I should have been clearer on in the issue.

When we say “buy up to $0.50,” that doesn’t mean to put in a limit order at $0.50.

That means as a trade progresses, we’re only willing to buy the warrants up to $0.50. Whether that’s tomorrow or five months from now.

That’s why, in the past, we’ve recommended looking at the current bid/ask spread and setting a limit order somewhere in between. That helps keep things orderly with the warrants.

And that’s something we’re looking at addressing more in the future.

The truth is that we’ve seen astronomical moves like these at Strategic Trader in the five years since we launched this product. But never in such a short period after our initial recommendation.

We typically see warrants move slowly at first, then explode higher later on in the trade. Like our past winners of 4,942% on Purple Innovations… 2,805% on Blink Charging… and 2,174% on Target Hospitality.

Those wins are more in line with what we expect from the warrants we recommend. They moved slowly at first… and then exploded higher.

In the case of Purple, it took about 22 months for the warrants to explode 50x higher. For Blink, that 29x win took 21 months. And we held the Target warrants for about 19 months before we booked that 22x win.

And keep in mind, not every trade will turn into a 10-bagger. In fact, those 10x or more returns are very rare. Most of our winners will hand us triple-digit gains.

For example, there was plenty of time to buy into the warrants on [our recent AI warrants pick]. We also took a Free Ride on those warrants on January 24, when we were up 141% in only two months.

That is still a fantastic outcome. And there are more than a dozen other positions still within the buy range in the model portfolio.

As for the Osisko Development warrants, as I said above, we’ll continue to hold them. That’s out of fairness to those readers who continue to hold their remaining position. But we’ll remove the Free Ride gain from our official track record.

We’re also setting a higher bar on liquidity moving forward.

Apart from that, I would urge all readers to please go back and read the April 2023 issue. In that issue, we discuss our trading strategy in more depth.

When it comes to warrants, we want to build an entire portfolio with as many warrants as we think have a chance of becoming winners. Or, as we described last April, we want to build a portfolio that will have a high “on-base percentage.”

We also need to be extremely disciplined and patient when it comes to speculating. Putting that all together will help us win over the long run.

So, while we’re disappointed that many of you weren’t able to buy into the Osisko trade, please know we’re continuing to work hard to bring you more – and possibly better – trades in the future.

We thank John for laying out that full explanation to his subscribers, and explaining how he plans to adapt and improve the Strategic Trader service.

If you have any questions or comments for our experts here at Legacy Research, we’d love to hear from you.

Write to us at feedback@legacyresearch.com and just type “Daily Cut mailbag” in the subject line.

More Markets

Today’s top gaining ETFs…

• Alpha Architect U.S. Quantitative Momentum ETF (QMOM) +2.1%

• VanEck Semiconductor ETF (CNXT) +2%

• ProShares Ultra QQQ (QLD) +2%

• SPDR Kensho Clean Power ETF (CNRG) +2%

• SPDR S&P Semiconductor ETF (XSD) +1.9%

Today’s biggest losing ETFs…

• Invesco S&P SmallCap 600 Pure Value ETF (RZV) -1.6%

• Invesco S&P SmallCap Consumer Staples ETF (PSCC) -1.4%

• iShares MSCI Turkey ETF (TUR) -1.3%

• Global X MSCI China Consumer Discretionary ETF (CHIQ) -1.3%

• iShares MSCI South Africa ETF (EZA) -1.2%

Cheers,

Kris Sayce
Editor, The Daily Cut