Dictionary.com defines distraction in two ways: 1) “a thing that prevents someone from giving full attention to something else” and 2) “extreme agitation of the mind or emotions.”
These two definitions of distraction are worth considering. Both clearly represent what occurred on Wall Street this week… and last week… and the week before that – and I’m going to go ahead and assume next week as well.
This week, the market was not happy with Wednesday morning’s inflation report.
The latest Consumer Price Index (CPI) data showed prices rose 0.5% in January over the previous month, compared with economists’ expectations for a 0.3% increase. It was the largest monthly increase since August 2023 and was up from the 0.4% rise in December. (We will look at this report more in depth in tomorrow’s Market 360.)
And over the past couple of weeks, investors reacted emotionally to the DeepSeek AI drama and President Trump’s trade tariff threats.
Fears about artificial intelligence not requiring as much computing power and concerns that increased tariffs on America’s two biggest trading partners could ignite inflation blocked out all rational thought.
During all three rounds of distraction, investors’ knee-jerk reactions drove the major indices sharply lower… before they regrouped.
Folks, this is a good time to remind you that Wall Street is a manic crowd – and crowds tend to “react” first and “think” later.
Now, I could tell you that when volatility hits, you should “stay calm” or “ignore the noise.”
But I realize words aren’t enough. We’re emotional beings… and so we need strategies for when we get distracted.
So, today, let’s first do a quick review of the past few weeks’ distractions.
Next, I want to lay out the two-part strategy I use to stay focused on what matters… and to make profits while doing so.
Finally, I’ll show you where and how I put these two moves to use – and where you can, too.
Now, let’s get started…
The “Trump Two-Step” – and other Distractions
The reality is that fears over DeepSeek, tariffs and inflation are vastly overblown.
As I’ve been saying elsewhere, it appears that the AI that DeepSeek uses may simply optimize various packets of data, which wouldn’t use a lot of computing power. However, other kinds of machine learning utilize a lot more computing power – and that’s why more data centers and an enhanced electrical grid are still necessary.
With more folks starting to come to this same conclusion, AI-related stocks are firming back up, especially in the wake of positive quarterly results from market leaders.
Meanwhile, fears surrounding the Trump 2.0 tariffs were mostly squashed within a day of their announcement.
President Trump shocked everyone – myself included – when he announced that he would follow through with implementing 25% tariffs on the U.S.’s two biggest trading partners, Canada and Mexico. He also announced 10% tariffs on China.
The good news is that Trump’s tariff threats seem to be a negotiating tactic.
After conversations with both Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum, he obtained some major promises to significantly increase border security.
So, the president did what some are now referring to as the “Trump Two-Step,” providing both countries with a 30-day extension.
As far as this week’s inflation report goes, here’s what I said Wednesday morning in my podcast…
There will be an adverse market reaction, but then I think the market will just regroup and be fine. The dollar remains very strong. The higher rates will attract foreign buying pressure, and rates might meander just a tad lower.
Now, I bring all this up not only to point out the major distractions that hit Wall Street… but also to show you the two strategies I use to stay focused on the job at hand: making money.
Here’s how I do it…
The “Navellier Two-Step”
First and foremost, our best defense against distraction remains a strong offense of fundamentally superior stocks.
That’s why instead of using my gut to pick stocks or trusting what companies say in their annual reports, I study data on almost 6,000 stocks every week and use my proprietary algorithm to run the stocks through eight filters. These eight factors – fed into my Stock Grader system (subscription required) – sort stocks with no alpha from stocks with good alpha from stocks with super alpha.
High alpha stocks outperform the market, but most people can never find “alpha” until long after the stocks have taken off. However, if you have an accurate way of finding “super alpha” – as my Stock Grader model does – you can often spot bull markets and manias, long before they develop.
The second part of the “Navellier Two-Step” is to invest in the bull markets and manias – the predominant trends – for as long as you can.
The reality is that there are a handful of trends currently in play and/or developing that could significantly boost fundamentally superior, high-alpha stocks more this year.
We all know that Trump 2.0 and his pro-business administration aim to trigger an economic resurgence.
He’ll do so through slashing regulations, shrinking the size of the federal government, lowering taxes… and even those tariffs the market hates.
You see, I suspect President Trump is using them to push more U.S. companies to “onshore” their manufacturing operations. In fact, if he is willing to implement 25% tariffs on our neighbors, then China, Europe, and our other trading partners are likely a little nervous – and onshoring plans could already be underway.
The fact is that President Trump wants to end the more than two-year manufacturing recession in the U.S. and reignite overall economic growth.
So, if the tariff situation plays out in Trump’s favor, and a lot of companies onshore their operations in the upcoming months, it could trigger an economic resurgence.
And President Trump will go down in history as a great leader.
But Trump 2.0 isn’t the only predominant trend out there…
From “Cool Tool” to Crucial Tech
We all know the global AI race is on – and that it’s already created many new millionaires and billionaires – but what a lot of folks don’t know is that we’re standing at the precipice of what I call “AI’s Crossover Moment.”
This is the point where AI stops being a “cool tool” and starts actively transforming industries, infrastructure and daily life.
Explosive gains in speed and processing power are colliding with breakthroughs in data deployment – unlocking capabilities that, just months ago, felt like pure science fiction. But now? They’re becoming reality.
How big is this?
Well, according to NVIDIA Corp. (NVDA) CEO Jensen Huang, this crossover could amount to a $100 trillion opportunity.
And that checks out – because if history has taught us anything, it’s that the biggest booms don’t happen when a technology is first invented. They come when it moves from concept to real-world adoption.
In my Breakthrough Stocks service, we dance this “Navellier Two-Step” all the time.
We invest only in fundamentally superior stocks… and we invest only in high-alpha stocks benefiting from one of these two predominant trends.
I’ve used this two-part strategy to give my followers a shot at recent gains as high as:
- 112% on an AI data-center play…
- 275% on an AI energy play…
- And 1,900% on an AI server play.
All we need to do from here is keep placing our bets on fundamentally superior stocks benefiting from Trump 2.0 and or AI’s Crossover Moment… and then hang on and watch our portfolios grow.
To help you do that, I just recorded an urgent AI Crossover broadcast to explain what’s happening and how folks can play this predominant trend for an unprecedented wealth-building opportunity.
Already, my system is lighting up seven AI Crossover plays, and I’ve issued Buys on each.
Go here now to see this special free broadcast.
And I look forward to being invited back here to talk with you again soon.
Sincerely,
Louis Navellier
Editor, Breakthrough Stocks
