The other night, I found my wife watching "Citizenfour." It's the documentary about whistleblower Edward Snowden blowing his whistle. I saw it right after its 2014 release. Whether you feel Snowden is a hero or a traitor isn't at issue here – the issue is that big brother is alive, well, and certainly stronger than it was in 2014.
The government, along with the world's largest companies, watch, listen, monitor, record, and archive every electronic interaction you have with the outside world. Or worse: your inside world. Snowden's point was to educate global citizens that their privacy was both compromised and exploited.
Think about it – all of your "free" or even paid services make you the currency. Free email services like Gmail, AOL, or Yahoo archive your every conversation. Every internet search tied to your IP address is logged. Think of the worst thing you ever searched – it's out there forever.
As is everything you've ever said or looked at on Facebook, Inc. (FB) and its Instagram platform, Snap Inc. (SNAP), etc. In addition, Siri on your Apple Inc. (AAPL) iPhone is always listening, along with Amazon.com, Inc's (AMZN) Alexa, Alphabet Inc.'s (GOOGL) Google Home Assistant, and Samsung Electronics Co., Ltd.'s (SSNLF) Bixby.
Your location, purchasing habits, and commuting times are all stored. At home, you're watched by computer webcams. And who uses cash anymore? Every time you swipe your credit card or use Apple Pay or a similar service, it just adds to your profile.
There exists a digital fingerprint representation of you that is so detailed and accurate, all someone needs is to get a well-studied lookalike to replace you. This is what Snowden realized and decided to go public with. The truly scary part is that everyone has become so reliant on modern ease-of-life. So, when the whistle blew, the aftermath was short-lived and didn’t result in any major government change.
It's like that funny scene in "Ghostbusters" when Louis is hunted by the dog-like beast outside Tavern on the Green. He screams in horror for help. The diners stop in silence, watch him get attacked, and then after two seconds return to their conversations as if nothing happened.
We are the same. Why? Because we all know it's happening and say: "I have nothing to hide." We quietly accept that the tradeoff for convenience is our freedom of privacy. But imagine life without all this convenience! "It's not worth it, and I couldn't get off the grid even if I tried. And I'm such a small actor in this huge play – there's nothing I can do."
That's the level of chilling insight I got working Wall Street's biggest stock deals in the early 2000s. The big boys run the show, and even my actions as a professional were a drop in the ocean.
Then, I realized that the power lay in tracking the big money. I didn't have to know who or even where they were. I just had to try and track and record their moves. That's when the idea of stalking silent big money began. If I could see what the masses couldn't, I could flip the odds from against me to for me.
I started in 2002 and never looked back. I wanted to give the disadvantaged average investor like me the upper hand by being able to surf the big money that really drives markets. I felt I could predict with a degree of accuracy which stocks would rise. All because I did something even better than becoming a big money player: I figured out a way to watch all of them safely from afar. It's like I created stock market night vision goggles.
The single broadest gauge born out of this is the Big Money Index. It tells us when aggregate big money is buying or selling. That information is immensely powerful. Looking at a Big Money Index chart, it's clear: big money investors often know and act ahead of market moves. Not because they know before (which is true), but they often dictate the moves by their actions:
Notice that, in January, big money buying slowed and reversed. Stocks kept rising until February, when the reality of coronavirus set in. Big money began selling a full month earlier. Then, in March, the market became deeply oversold. We were sending in the marines to buy great stocks. Big money rocketed and lifted the entire market with it.
Then in September, stocks began to sag consistent with pre-election risk-off. But look how the Big Money Index began falling slowly from July and then accelerated its drop in late August. (We just completed a white paper on the Big Money Index.)
Let's face the hard truth: the big forces will always have the upper hand. Big corporations, governments, and money will always use their natural advantage. So, the natural conclusion is: "Who am I to do anything about it?"
But there is something you can do about it: flip the script. If you wanted to get off the grid, you could use encrypted email, delete your Facebook account, and strictly use cash. Impractical as it may be, it's possible.
But prevailing at stocks may be much easier. You could simply reveal the big money movements – provided you know how. It all has to do with understanding your place. Big money accounts need investors and traders to buy from and more importantly sell to. If you're not watching the big money, odds are that you're the one they need.
Stocks are like free services akin to Facebook, Gmail, Google, etc. How are they all free? If you can't figure out what the product is, you're the product.
The Bottom Line
We (MAPsignals) are bullish on high-quality U.S. equities in the long term, and we see market pullbacks as areas to pick up great companies.
Disclosure: At the time of publication, the author holds a long position in Alphabet shares but no positions in the other aforementioned securities.