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Is Chaikin Power Gauge Report good?
Can you really use Power Gauge ratings to make better investment decisions?
Are there any better alternatives to Chaikin Power Gauge Report?
Chaikin Power Gauge Ratings
One of the key selling points for Chaikin Power Gauge Report is its Power Gauge Ratings.
So, what are Power Gauge Ratings?
How do you use them?
Are they reliable?
Power Gauge ratings are calculated by looking at four components (i.e. Financials, Earnings, Technical, & Experts) for each stock.
Each component is comprised of five factors.
Here’s the breakdown of the 20 factors, grouped into 4 components, that make up the Chaikin Power Gauge stock rating model:
- Financials: LT Debt to Equity, Price to Book, Return on Equity, Price to Sales, and Free Cash Flow
- Earnings: Earnings Growth, Earnings Surprise, Earnings Trend, Projected P/E, and Earnings Consistency
- Technical: Relative Strength Vs Market, Chaikin Money Flow, Price Strength, Price Trend ROC, and Volume Trend
- Experts: Analysts’ Earnings Estimates Trend, Short Interest, Insider Activity, Analyst Rating Trend, and Industry Relative Trend
By going through the 20 factors, you can see it combines both fundamental and technical analysis.
For example, Chaikin Money Flow is a technical indicator.
Chaikin Money Flow is a proxy for the magnitude of institutional buying or selling over a 21-day period, looking back over 6 months to determine the persistence of accumulation or distribution.
If the big institutions are buying more and more, then it thinks that is a bullish sign for the stock.
Here’s another factor – Analysts’ Earnings Estimate Revision.
It tells you whether analysts are raising or lowering their earnings estimates for a given company over the past thirteen weeks.
If analysts are raising estimates on the company, that’s a bullish sign.
As you can see, this Chaikin Rating model is designed to give you an indication of where a stock is headed over the next 1-6 months.
In other words, it’s used for short-term or intermediate-term trading.
Now, let’s see exactly how they arrive at the Power Gauge Rating for each stock.
For each component of a stock, a power gauge rating is assigned after evaluating all the five factors within that component using its own methodology.
Take Earnings for example.
After evaluating all the five factors, a power gauge rating is assigned.
There are five different power gauge ratings for a component:
- Very Bullish
- Very Bearish
Earlier on, we mentioned that Power Gauge Rating takes into account four components (i.e. Financials, Earnings, Technical, & Experts) for each stock.
Combining the components using a proprietary algorithm, it derives the stock’s Power Gauge Rating.
There are also five different power gauge ratings for a stock:
- Very Bullish
- Very Bearish
Basically, it’s very simple.
If the Power Gauge Rating for the stock is Very Bullish, it means that they think there is a very good probability that the stock would go up in the next 1 to 6 months.
Conversely, if the Power Gauge Rating for the stock is Very Bearish, it means that they think there is a very good probability that the stock would go down in the next 1 to 6 months.
Chaikin Power Gauge Rating Performance
So, how has Chaikin Power Gauge Rating performed over the years?
Can you use it to beat the market?
Now, let’s look at the real-world performance of buying stocks based on power gauge ratings from 2nd Jan 2011 to 31st Dec 2019.
As you can see, the power gauge rating performance is very similar to Russell 3000 ETF.
What that means is that you would achieve the same result by just buying Russell 3000 ETF from 2011 to 2019.
On top of that, you wouldn’t have to waste time buying and selling so many different stocks every single month for 9 years.
Now, let’s take a look at another set of data.
Below is the real-world performance of buying stocks based on power gauge ratings from 2nd Jan 2011 to 31st Dec 2020.
The results for the years 2021 and 2022 are not included.
As you can see, Power Gauge Rating recommendations only overperformed Russell 3000 ETF after including the data for the year 2020.
The year 2020 is a very unique year where you saw the market crash and then stage a V-shaped recovery shortly after.
Basically, almost anyone who bought stocks after the crash in March would have made money, regardless of what stocks they bought.
So, it is no surprise that the Bullish Power Gauge ratings have done well.
If you take a closer look, you would see that EVEN the Bearish Power Gauge ratings have outperformed Russell 3000 ETF after including the data for the year 2020.
What does that mean?
Even for the stocks with Very Bearish Power Gauge ratings, their share prices had gone up significantly in 2020.
Chaikin Power Gauge Pricing
So, what do you get from subscribing to Chaikin Power Report?
And how much does it cost?
As a subscriber, you would get the following:
- Access to Power Gauge Ratings
- Top 4 stocks to buy right now and hold forever, according to the Power Gauge
- Each month, Marc Chaikin will email you with his #1 mid- or large-cap stock recommendation with the potential to make you 3 to 5 times your money, according to the Power Gauge, along with a constantly updated model portfolio of the top 5 stocks to buy.
- Throughout the month, Marc will email you updates as needed, telling you when to lock in gains, add to or close a position, and any developments.
- Research Report: Power gauge report: how to double your money in the best stocks
The Power Gauge Report usually costs $199 for one full year.
But, for first-time subscribers, it’s just $49 for the first year.
After that, it will automatically renew on an annual basis at $199 (plus applicable taxes).
Is it worth it?
I think there are better alternatives to Power Gauge Report.
Chaikin Power Gauge Vs Seeking Alpha
So, which is better, Chaikin Power Gauge or Seeking Alpha?
The short answer is Seeking Alpha.
Seeking Alpha provides everything that you can find in Power Gauge Report and much much more.
With Power Gauge Report, you get Power Gauge ratings.
With Seeking Alpha, there are three different types of ratings:
- SA Author Ratings ‒ ranging from Strong Buy to Strong Sell
- Wall Street Ratings – consensus and price targets on the stock by Wall Street Analysts
- Quant Ratings ‒ based on over 100 metrics, updated daily
The most interesting of all is its proprietary Quant rating.
In my opinion, Seeking Alpha’s Quant Rating is more powerful than Power Gauge Rating.
It was developed by CressCap, quantitative analytics and data platform that was acquired by Seeking Alpha.
So, what exactly is Quant Rating, and also how does it really work?
Seeking Alpha’s Quant Rating is derived after taking into account the following five “Factor Grades”:
- EPS Revisions
The Factor Grade is determined by comparing the relevant metrics for the factor for the stock to those for the other stocks in the same sector.
For example, to determine the grade for the “Growth” factor, metrics such as past sales growth, projected earnings growth, and stock price performance for the stock will be compared to the same metrics for the other stocks in the same sector.
Then, each factor is assigned a grade, from A+ to F.
Grade A+ means that the stock has the highest growth potential compared to its peers in the same sector.
On the other hand, a grade of F means that the stock has the lowest growth potential compared to its peers in the same sector.
In total, Seeking Alpha’s Quant rating is derived by comparing over 100 metrics for the stock to the same metrics for the other stocks in its sector.
There are five types of Quant ratings:
- Strong Sell (i.e. a score of 1)
- Sell (i.e. a score of 2)
- Hold (i.e. a score of 3)
- Buy (i.e. a score of 4)
- Strong Buy (i.e. a score of 5)
On the other hand, Power Gauge Rating Model looks at only 20 metrics, grouped into 4 factors “Financials, Earnings, Technical, & Experts”.
Seeking Alpha‘s Quant Ratings take into account almost all these 20 metrics and many more.
So, how have Seeking Alpha’s Strong Buy Quant Ratings performed, compared with S&P 500?
Do take note that the performance is based on backtesting.
From 2010 to 2022, Seeking Alpha Strong Buy achieved a total return of $174,156 based on $10,000 in investment capital while S&P 500 achieved a total return of $40,721.
Apart from Seeking Alpha Quant Ratings, you also get tons of useful financial and fundamental information (i.e. Earnings, Valuation, Growth, Profitability, Peers, Dividend, etc) and news and analysis on the stocks that you are researching or stocks that you own in your portfolio all in one place.
Now, how much does Seeking Alpha Premium cost?
- Basic: Free
- Seeking Alpha Premium: $239/year
- Seeking Alpha Pro: $2,400 per year (mostly for hedge fund managers)
So, is it worth paying for Seeking Alpha Premium?
$239/year works out to be about $19.90/month (i.e. $0.66/day).
A cup of Starbucks coffee costs about $2.75.
Personally, I have been using Seeking Alpha Premium for my own stock research and analysis.
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