Video Issue: Ignore the Volatility… But Don’t Ignore This Outlier ... https://members.brownstoneresearch.com/outlier-investor/video...

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Jason here with your latest Outlier Investor video issue…

Today we’ll take a deep dive and answer why Brooks Automation (BRKS), our latest outlier
stock, is a name you need to own today.
But just as importantly, we’ll discuss the recent market volatility that has caught some of our
recent recommendations under fire. As you’ll see, this is no garden-variety volatility. It doesn’t
reflect the high quality of these businesses. In fact, it has much more to do with a hedge fund
that got too big for its britches.
Plus, be sure to stick around to the end of the update, where I answer a fascinating question
from a fellow reader about “dark pools” – where big-time money managers go to trade… And
show you how even they can’t evade my Big Money system.
Just click below to watch the latest video issue of Outlier Investor.

Talk soon,
Jason
Transcript
Hello, my outlier investors!
It is March 29th, Monday, at around 2:00 p.m. We fired out a buy alert last week for Brooks
Automation (BRKS), your latest Outlier Investor stock. We're going to go over that in just one
minute.
Before we do, I'm going to quickly recount some stuff about the market, the Outlier Investor
portfolio, and the volatility we've been experiencing. So we’ve got a lot to talk about, and I'm
going to try and keep it short. I know I've said that before, but it's a work in progress, so work
with me.
The Fear of Loss Is Real
So really quick, before we get through all that, I don't know about you, but sometimes I just

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feel like I have a terrible day. Right? Everything's going against me. You wake up, the car
doesn't start, stuff like that.
Well, for the past two weeks, I felt that way. Right? I fell off my bike going zero miles an hour.
I broke my elbow. That stinks. It hurts all the time. Then, I made an innocent remark to my
wife, and it really blew up in my face. Guys, if you're out there, I'm sure you've been there. No
fun at all. I just had a series of events.
And then, of course, I recommended some great stocks to you, outlier stocks, and some of
them have gotten just pounded. So, yeah, it made me feel bad. We're going to go over those
stocks and why we shouldn't worry in just a moment, but the cumulative effect is this
emotional baggage. But here's how I get through that stuff. I focus on data. I focus on the black
and white, and I try not to let emotion let me get carried away because that's typically when we
do bad things.
Now, emotion did not cause what I'm about to talk about for Brooks Automation, but the fear
of loss is a very real emotion. Some of you have asked me, “Why don't you have stop losses?
Why don't we do trailing stop losses? If you identify great outlier stocks and they rise and
rocket, shouldn't we be concerned about leaving some of the profits on the table?” And now is
a perfect time to feel like that because some of our stocks are under water, not by a ton, but it
doesn't feel great.
So, when Outlier Investor was Palm Beach Trader, I recommended to my readers to buy
Brooks Automation. It was a great stock. At the time, it had all the great qualities that we're
about to go over in just a moment, and we recommended that stock in June of 2018 at $34.44.
By December, six months later, the market had come under pressure. There was weakness. We
were getting stopped out on various trades. I think our stop loss at the time was 30%. We
wanted to protect profits. So we sold Brooks Automation at $24.04.
We locked in a 30% loss, and guess what? The stock rallied on to all-time highs. It's pulled
back a little since then, but right now, it's trading at around $79.50. So, think about that. We
bought it at $34, sold it at $29. It felt good. We protected our capital, but then we watched
these stocks rocket higher.
That is why I don't have stops in the Outlier Investor. Because if we spend all of our time and
focus finding the best stocks that Big Money is buying, eventually, odds are in our favor that
they're going to go higher. And Brooks Automation's a perfect case in point.
So, I want us to buy it again. Let's quickly go over why.
A Big Money Winner
I think you'll know a lot of what I have to say because I say it all the time. I love sales and
earnings growth. Okay? I love a stock that's making money. One year, they have grown sales I
think it's about 15% as I'm looking here at my metrics. In three years, it grew sales 19%. One-
year earnings growth 121%. That’s huge, right? Three-year earnings growth 43%.
Do they make money? Yes. They have a gross profit margin of 39%. That means they keep 39
cents of every buck they make. That is awesome.
What do they do? Well, they're in semiconductor equipment services in the tech sector. They
make hardware, parts, semiconductors... All the technology we rely on whether you're into the
Cloud, mobile communications, computers, whatever. Everything's got semiconductors...
Even your TV.
This is a six-billion-dollar market cap company. It's got plenty of room to grow into a giant.
And they're very low debt. They’ve got only 7%. That means they borrow seven cents for every
dollar they make.
It is a really solid company. Quite frankly, I should have never sold it. Let my loss be your gain.
Let's buy Brooks Automation, if you haven't already. The alert went out last week. It’s a great
company and a buy up to $79.

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Most importantly, does Big Money like it? And the answer, of course, is yes. While we haven't
seen recent Big Money buy signals, we've seen plenty of signals throughout the past 12
months, and it has been on my buy report a total of 12 times since 2014, and it's up about
500% since then. So, this is a great stock. We're adding it to the portfolio today.
Stocks Have Been Flip-Flopping
So, while we're on the subject of the portfolio, I'm sure a lot of you are wondering, “Jason,
what is going on? You told me to buy Tencent Music (TME). You told me to buy Twitter, a
bunch of these companies that we just added... PagSeguro Digital, ZillowGroup... They all
came under fire.”
Yes. Look, it happens. It's a part of why I felt grumpy the past couple of weeks. But what I will
tell you is use Brooks Automation as an example. I think eight out of the nine stocks I got
stopped out of when I was running Palm Beach Trader eventually went on to go to all-time
highs and continued chugging higher. Why? Because we pick great companies that Big Money
is buying.
Sometimes markets get under pressure. Right now, there's a rotation. One day they hate tech,
one day they love tech. One day they hate reopen, meaning restaurants and leisure and cruise
ships and hotels, and one day they love it, and then they hate it, and it's up and down.
I had a client come in to me and today said, "God, what a weird market. I walk away, I come
back, stocks have totally flip-flopped like fish." This is a period of volatility between two
earning seasons. We wrapped up earnings for quarter four of last year, just a couple of weeks
ago, and we got a couple of weeks until earning season starts for quarter one.
Now interestingly enough, going back to that unemotional let's visit my data, I made
predictions on New Year's Eve in my research service, and amongst them I said the Big Money
Index (BMI) that I rely on all the time would peak sometime in January, which it did. I said
the market would peak in January. It actually peaked on February 12th. And then I said, and
this is important, nobody liked to hear it at the time, the market will eventually trough on
April 19th.
And that is not pulling it out of a hat. I took 30 years of averaged data. I measured the times
that the BMI peaked and then the market eventually troughed thereafter. I calculated the
average, spat out a number of trading days, and there it was... April 19th.

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So far, these predictions have proven pretty accurate. The market peaks and the BMI peaks
were off by a few days, but within between 1% and 3% of the S&P's high. The market is in a bit
of a downtrend, choppy trade. I think earnings will revise it, and April 19th is just as earning
season kicks off. So that might play out.
So what does that mean for your portfolio? Expect a little more volatility, people. It's part of
the game. This happens. Stocks go up, they go down. The long-term trend, is that they should
go up. Right? And our winners should be bigger than our losers, and we should win more than
we lose.
So, how are we doing? Let's look at the portfolio. For those of you who have just joined,
obviously, these don't reflect your results. We'll go over that in just a moment. But for those of
you who've been with me since the beginning – we have 28 open trades right now. One of
them is an option. Nineteen of these trades are winning and nine are losers. And that is only
very recently. If you remember, prior to February, we were batting 87% to 90% winners, even
higher, 100% open stock trades at one point when the market was very frothy. And I was
saying, “Hey, we're going to expect some volatility.”

So, we're winning 68% of the time now, even in market pressure. That's great. Our average win
is 97.7% and our average loss is 17.2%. Our expected return over nine months would therefore
be 61% with an average duration of eight months.

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Now, those of you who just joined, you're like, "Great. Thanks, Jason. That's not what I'm
seeing. Where's the beef?" I don't know if you remember that Wendy's ad. I'm probably dating
myself there. Anyway, we pick great stocks. They are under pressure. A lot of them of are
technology stocks. Because the market gets cranky, and it goes out of favor. It decides tech is
over-valued, it needs to come in. Whatever the case may be.
More Chinese Regulation
Let's talk about Chinese stocks really quickly. Tencent Music Entertainment is our only really
Chinese stock. It got absolutely clobbered last week, and we couldn't figure out why. Suddenly,
there were news headlines that China was going to regulate data collection on their stocks, and
it hit the stock. And then all of a sudden there were rumors that Chinese stocks were going to
get de-listed in the U.S. It's nonsense. It's not going to happen.
These rumors, as it turns out, I don't know if they were engineered or not, but a major big
multi-billion-dollar hedge fund had to unwind a huge portfolio of leveraged long stocks. That
means he borrowed tons of money to buy more stock than he could afford, and the brokers
called him up. And brokers like Goldman-Sachs, Nomura, Credit Suisse – big, big banks. They
said, "Hey, buddy. You need to pledge cash because we're giving you a margin call." And he
says, "I can't pay." They're like, "Okay, I'm selling your stock."
They sold billions of stock on Friday. Tencent Music Group was one of them. So, last week was
very volatile. Nothing has changed with the business. There are still a ton of people in Asia,
listening to online music from the Tencent Music Group. It's a growing demographic. It's a
great revenue and profit generator. We're just going to hang tight. Don't stress. I don't want to
blow it out at the bottom and watch it raise to new heights like Brooks Automation, which
we're adding.
Let’s Look Inside the Mailbag
So, with that, I'm going to wrap up. I want you to keep feedback coming and keep asking me
great questions. Here’s a comment and a question from subscriber, Don.
"First of all, I want to say the research services I've followed over the years, I'm settling on
the Outlier Investor, my favorite one."

Thank you, Don. Love that.

"99% of the newsletter analysts I have tried to follow use inferential analysis, but through
your direct assessment of the BMI, your analysis is not inferential but direct." Very true.
"Simply put, the other guys look at the fundamentals or technicals of an equity and hope to
infer what the stock will do. But through the BMI, you track the exact and direct factor
that drives prices up or down, buying and selling, and you can't get any more direct
analysis than that. I can't think of a better way to go than what you are doing."

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Don, you should come on my side. Tell all your friends. You should help me get the word out.
"For my question, I keep hearing about the dark pools, which are, as you know, supposedly
huge hidden trades that really show Big Money activity behind the scenes in the market. Is
this newsletter hype or are these pools worth tracking? Does your BMI have anything to do
with these dark pools? I just want some clarification on how it really works, how the world
really works so I can think about all of this intelligently and with some common good
sense. Thanks a million for all you do."

Don, thank you for writing in. I'm going to keep this really quick.
Dark pools are prearranged algorithmic secret meeting places for stocks to cross. Yes, they are
a thing. Yes, they happen all the time. Big, big accounts want to stay anonymous. Why, Don?
Because if I'm a big hedge fund manager and I tell the world I'm buying a stock before I've
bought it, everybody else is going to pile in and I'm fighting myself. Right? I got to pay higher
prices that I wouldn't of had to pay if I kept it a secret.
So part of keeping it a secret is this dark pool technology. So, Don, if you managed a ton of
money, you could enter in an order. Nobody sees it. And if someone should happen to match
the other way, you get paired off and you execute your stock.
Now, is it newsletter hype? I can't really speak to that. It is a secretive technological way of
trading, and it's very behind the scenes. So, I can see the mysteriousness and the mystique of it
all.
But here's the deal about dark pools. Does my BMI track it? Every share that ever exchanges
hands at all, if a listed share of a company changes hands from me to you, whether it's a dark
pool, an algo, high-frequency trading, mom and pop, or my mom buying shares in her IRA,
then it has to be reported to the tape. The tape is a street lingo for exchange-listed volume
being reported for FINRA, the financial regulatory authority, and the SEC.
So if every single share is reported to tape, my BMI sees it. Because I run my models in the
middle of the night while I'm sleeping. My computer goes to work. It looks at all the trading
volume from the prior days, weeks, averages, all these things. So every share, even if it's in a
dark pool, appears in my BMI and I’m able to incorporate that into my analysis. It doesn't
specifically say this is a dark pool, or this is an algo. I'm more interested in what the Big
Money is doing in the aggregate, not in the individual places.
Hope that answers your question. Keep the questions coming. I'm going to take a deep breath
because I just talked forever. So, when you have bad days, try and keep it all in perspective and
focus on the black and white. Don't let your emotions get carried away. Otherwise, we get
stopped out of great stocks like Brooks Automation.
Have a great one. I will talk to you soon. Take care. Bye.

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Stocks

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