Pick One Great Stock (From The AI Trade) And Buy The Buy Signals/ $-Cost Average

The most powerful buy signal in the Quentinvest armoury is the golden cross. It’s not infallible; nothing is in the stock market, but it works incredibly well. We know that Palantir is an amazing company, growing at warp speed and sitting at the heart of the simultaneously exciting and terrifying AI revolution. The last golden cross buy signal was a humdinger. It was followed by a 29-fold rise in the share price. It seems unlikely that anything like that will happen again but we have a new golden cross buy signal, which makes the shares look attractive.

We’ve been here before but just to remind you, Palantir is on a spectacular role.

Our business is compounding at a rate and scale that we have never before witnessed.

We generated $1.9 billion in revenue for the second quarter of the year—another record in our company’s two decades of operations, reflecting a 93% growth rate over the same period the year before.

Our entire business nearly doubled in the span of twelve months.

And the core of our business, in the United States, continues to expand at an unrelenting and breakneck pace.

We generated a record $1.6 billion in revenue for the second quarter in the United States, representing a 115% increase over the same period last year.

While our U.S. commercial business is on fire, we believe it is nonetheless just nascent.

Given what is happening the company and its mercurial CEO, Alex Karp, are understandably bullish on prospects. All we have to do is agree or disagree. A similar challenge greeted the congregation at a wedding I recently attended where the vicar asked us to say the Lord’s Prayer with him if we knew it or not if we didn’t want to. Things are often binary.

I like the idea of becoming an owner of Palantir shares at a reasonable price. The problem is to judge what is a reasonable price. Palantir’s latest quarterly revenue was around $2bn, or $8bn annualised, or maybe $10bn or even more annualised for a business which is still growing. This means it is valued at 46 times revenue. Net income was around $1bn so the shares are valued at 92 times earnings.

That does not seem outrageous to me. When companies are growing this fast it is hard to value them. Anthropic is expected to be valued around $2 trillion and is growing at an insane pace. It had turnover of $4.6bn in 2025 and turning is currently running at $100bn a year. It is not presently profitable but that is subject to the vagaries of accounting principles. It is clearly doing unbelievably well and is worth God knows what, a lot.

If Palantir is anything to go by Anthropic shares might well double in opening dealings. When you are riding a rocket who knows where and when to get on. My impression is that the stock market mood is sceptical about AI even though the boom seems as vigorous as ever, or is even accelerating if Nvidia is to be believed.

Let’s think $-cost averaging. Imagine that you put $1,000 every month into your spread betting account and used that to buy $5,000 worth of Palantir shares in a forward bet on a spread betting account. Gung-ho investing I know, but let’s imagine. I first recommended Palantir shares on 7 November 2024 at $55. Suppose that we invested $1,000, buying $5,000 worth of shares then and in every subsequent month.

This is a very aggressive strategy but could have produced an incredible result. You would have invested $23,000 in actual money and you would have bought 934 shares, which are presently worth around $180,000. Better still you would have a valuable holding in a company which is growing at an accelerating rate. If Palantir keeps growing at anything like this pace the shares will become cheap, but they won’t, they will stay expensive so their value will go up.

And think about this. You have been pursuing the strategy for less than two years. Imagine what might happen if you keep going into the future. The big question is – would you have faced a wipeout along the way. Figuring out the answer to that one is more complicated. Remember that you are only using leverage based on the cash you put in. You are not investing the extra equity created by rising share values so, for much of the time, your leverage would be falling.

The big test came between November 2025 and June 2026 when the shares roughly halved.

Let’s look at another share which was very strongly recommended for purchase with trillion dollar potential in February 2020 – Nvidia. What would have happened if you had followed a five times leveraged strategy but only investing cash ($1,000 per month), not investing the appreciation in the value of the equity which would have been considerable. You would have invested $80,000, as I say, all in cash. This would now be worth $3,604,449, so over $3.6m.

This is the prize that awaits us if we can pick the right stocks and I am basing this on stocks that I actually picked. It also depends on avoiding the inevitable wipeouts and that, I fully agree, is a challenge. If you pursue a pedal to the metal strategy of buying shares in a spread betting account at five times leverage and invest all the equity gains in more shares you will have moments of incredible appreciation but a wipeout is a certainty. So we know that strategy will not work.

You could try to use my infallible selling rule. Whenever you think to yourself this investment business is amazing; I am doing so well. You must immediately sell everything and wait several months before even thinking of reinvesting. But that is so hard to do. I can’t do it anyhow.

Strategy – How To Avoid Wipe-Outs

I don’t have all the answers but we are working flat out to solve this problem. We need better information so we need to present our spread sheets so that they capture the cost of placing forward bets (the spread between the price at which you buy and the price at which you sell plus the need to roll over your position every nine months) and the trend in your margin requirement.

The basic rule on IG is that if your equity falls to below 50pc of your margin requirement they sell you out. We need to avoid that happening, which means we need resources in reserve, rather like an attacking army which has a cavalry or tank division ready to be sent into action when the enemy least expects it.

I want to give you an insight into my thinking about how to do this. It is complicated but we are playing for big stakes. Number one you only leverage cash you have paid into your account. This enables the appreciation in the value of your shares to create what could be a substantial buffer in your account.

Number two you run a parallel account where you invest the same amount every month in an ISA in the same stock. Again you are creating tax free gains, hopefully, and since there is no leverage there is no possibility of a wipe out.

Number three and this is the most sophisticated bit of the analysis you run a third investment strategy which involves putting an equal amount of cash into medium term dated Treasury bills , which you know will be redeemed in full at maturity. I believe these three strategies will mean you can survive any imaginable wipeout even including one driven by an explosive rise in interest rates.

This involves the deployment of more cash (three times as much) but means you should be (a) rock solid and (b) enjoy the incredible excitement of seeing massive long-term appreciation in your leveraged account, and hopefully very respectable appreciation in your unleveraged account.

You may need to draw on your Treasury bill holdings by selling in the market but this need not be bad news because the funds raised will be injected into your leveraged equity account, which in turn means you will be able to continue $-cost averaging at a time of deeply depressed equity values.

I need to work through the sums on this to see if what is a theoretical solution would work in practice. It also puts sharp focus on choosing stocks capable of long-term appreciation and we will be using tricks such as massive chart breakouts, golden cross buy signals, and key word analysis plus common sense to find these stocks. A candidate which has already been mentioned apart from the candidates drawn from the AI trade is SpaceX Exploration, with its huge ambitions to conquer space and the excitement of having Elon Musk as the visionary individual in charge. The shares have already been incredibly volatile but they justifiably capture the imagination of investors, which is just what we want. Anthropic is likely to be another candidate when they come to market. It has that electrifying combination of explosive growth, vast potential and total uncertainty on the part of investors, over how to value it.

Bottom line we need to do some serious number crunching to see how all this would work in practice but I am hopeful that the returns available will be spectacular; so spectacular that I think subscribers will agree with me that $-cost averaging is a key strategy for every investor looking to make massive gains with a degree of certainty. It has that magic ability to remove much of the risk in investing in high performance/ high volatility stocks. The volatility which is disturbing for many investors becomes a positive advantage.

Remember the example of my printer’s son, still a very young man, who used $-cost averaging to build a portfolio of £1.8m. He is obviously a very clever young man but, even so, talk about proof of concept. I feel rather touched that the coincidence of his dad being my printer for many years contributed to this amazing result.