📈 Want to know where the smart money is moving?

Our new Multi-Timeframe Trend Stacking Report shows you exactly how to filter market noise into actionable signals.

Inside you’ll see:

• Which asset classes are trending up (and which to avoid)

• How to “stack” short, medium, and long-term signals into one clear play

• ETF examples you can use to position today

👉 Grab your copy for just $4.99 and start thinking like the pros.

⚡ LIGHTNING ROUND

📊 Old Metrics Fail: P/E and book value miss the real story for fast-moving businesses.

📈 Rule of 40 Defined: Revenue Growth (%) + Profit Margin (%). If it’s ≥ 40, speed and efficiency are in balance.

🟢 Works in Any Market: Finds efficient scalers in boom times and strong-margin names when profits matter most.

📉 Early Signal: A +5 point gain in 2 quarters often signals efficiency gains before the market catches on.

🧠 Action Today: Run the Rule of 40 on your watchlist — track quarterly to spot re-ratings early.

WEEKLY WISDOM

INVESTING TIPS & OPPORTUNITIES

When Value Stops Working

I can’t think of a single serious investor I know who still leans on P/E ratios.

That game ended years back.

Like them, you should be asking is this company actually building a business, or just juicing top line expansion with my money?”

And once you start asking that, the flaw in the old metrics becomes obvious: for the past decade, things like P/E and book value have been useless in the parts of the market that actually created wealth.

Cheap industrials stayed cheap.

Meanwhile, software firms with no earnings traded at 20x sales and still looked “cheap” in hindsight.

The fundamentals didn’t stop mattering. Investors were just measuring the wrong ones.

The Rule That Actually Works

In today’s fast-paced economy, the question isn’t “cheap vs. expensive.” It’s efficiency vs. waste.

The shortcut many pros use? The Rule of 40.

Just add revenue momentum to margins, nothing fancy.

• If the score is 40 or higher, you’ve got a company balancing speed and profitability.

• If it’s under 40, expansion is being bought with investor capital, not earned.

Why This Works Now

Markets are moody.

One quarter it’s “chasing scale at all costs,” the next it’s “prove the profits.”

Right now we’re somewhere in between.

That’s why the Rule of 40 works: it cuts through the mood swings.

• In a market obsessed with top-line acceleration, it surfaces companies scaling without torching margins.

• In a profit-demanding phase, it flags firms with slower revenue increases but rock-solid efficiency.

That balance is why private equity, crossover funds, and institutional managers use the Rule of 40 behind the curtain.

What It Looks Like in Practice

A few recent numbers:

• Take ServiceNow (NOW): 24% revenue growth plus 19% margins = 43. They’ve been a Rule of 40 poster child for years, and the market prices them like one.

• Snowflake (SNOW) comes in at 30, big sales growth but negative margins. The story’s alive, but efficiency’s lagging, which explains why the stock still remains volatile.

• Adobe (ADBE): 10% revenue lift + 33% margin = 43. Not a speed demon, but bulletproof margins, and that’s why institutions keep paying up.

You see the point: the Rule of 40 reframes the “cheap vs. expensive” debate into something useful, like who is turning sales momentum into durable value.

The Tell No One Talks About

The secret isn’t the number itself, it’s the change.

Watch for jumps: if the score climbs five points or more across two quarters, it’s often a tell that something under the hood just got more efficient.

That’s when re-ratings happen.

I’ll give you an example: in late 2022, ServiceNow’s score jumped from 35 to 43 in two quarters as margins expanded faster than consensus modeled. Stock re-rated 30% while the S&P drifted sideways.

That’s the kind of signal this framework gives you if you track it consistently.

Your Move This Quarter

Pull up your watchlist and tack margins onto revenue progress over the last twelve months.

• ≥ 40: You’re looking at a business balancing scale and durability.

• < 40: Be cautious — the story is top-line only or margin-only.

• +5 point change over 2 quarters: That’s the market’s blind spot. That’s where the money is made.

The New Definition of Value

Today’s “value” isn’t about P/E ratios or cheap multiples. It’s about who can compound results without torching capital.

The Rule of 40 won’t hand you tickers on a silver platter.

But it gives you a lens the market actually respects, one that separates durable compounders from temporary stories.

That’s how you avoid paying up for hype and instead buy into real value — the kind that compounds.

P.S. 🧠 Got a Smart Investing Move?
We’re collecting real strategies from readers who think a few steps ahead.
Share your best tip—and you might get featured.
👉 Submit Your Strategy

The content provided in this newsletter is for informational purposes only and should not be considered as specific advice for any specific individual. The information is prepared by knowledgeable individuals and is not written by certified tax professionals or investment advisors. For personalized advice tailored to your unique financial situation, consult with a qualified tax professional, financial advisor, or attorney.