BP’s 52% Gain Is Just The Beginning...

You can find some incredible profit opportunities when people invest with their hearts instead of their heads. And one of easiest — and most lucrative — emotions to exploit is unnecessary pessimism.

Folks can turn against companies for flimsy reasons. Then the boycotts start, nervous investors sell their shares, and some traders may even actively bet on the company to fail.

In my experience, this can be the best time to buy in…

One of the most notable examples from recent history is BP plc. (BP).

BP is a solid energy company with oil rigs all around the world. But eight years ago, many people would have had a hard time believing the company would still exist.

That’s because on April 20, 2010, a BP oil rig exploded in the Gulf of Mexico. It killed 11 people and resulted in an oil spill that caused millions of dollars in damages.

Up until then, BP was having a fantastic first quarter of 2010.

The company grew revenues to $73 billion and earnings to $6 billion — a 33% increase in earnings from the previous quarter.

But after the disaster, none of that mattered. The oil spill put a nasty stain on the company’s reputation.

Obviously BP did everything they could to win back the public’s trust. But as threats of investigations and lawsuits piled up, investors thought BP was the 21st-century Hindenburg descending from the sky.

The stock fell roughly 55% from April to June.

The thing is, you would have been smart to dive into the stock when EVERYONE else hated it…

If you had invested in BP on June 25 and sold on August 6, 2010, then you would have made 52%.

That’s incredible!

Here’s what happened…

BP’s price had fallen largely because of psychology. Yes, the disaster was going to cost the company dearly. But it wasn’t so bad that the company should lose half its value. The drop was too far, too fast.

By the end of June, people had reached their peak of hatred toward the company and couldn’t hate it more. That’s when the company’s fundamentals re-asserted themselves and savvy investors realized BP would likely bounce back.

While this is an extreme example, similar stories happen to thousands of stocks around the world every single day.

Benjamin Graham, the father of value investing and Warren Buffett’s teacher, once said…

“In the short term the stock market is like a voting machine, and in the long run it is like a weighing machine.”

Stocks quickly move because of their popularity, but slowly move because of the value of their fundamentals. In other words, the numbers always win out. And at some point, traders, who wanted the stock price to continue its decline are unable to keep scaring off any buyers of the stocks.

This is when a stock can go from being a hated company to the best performing stock. Traders who recognize the more are poised to profit immensely as the laggards become the leaders.

This is the science behind my new “Vertical Fortunes” research.

My new system pinpoints exactly which hated stocks are set to surge… before it happens!

As I’ve explained before, this has been my bread and butter in my decades-long trading career. And now I’m spilling all the details.

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Yours for weekly profits,

Alan Knuckman

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