A few weeks ago I wrote about a signal I use to find potential opportunities: the macro selloff. Quick recap — I look for big macro events (oil spikes, rate shocks, whatever) and ask whether the market's reaction is proportional to the actual damage, or just an overreaction.

That's one piece of a bigger idea I want to make explicit: nothing else in investing matters until you've heard about the opportunity.

You can be the sharpest underwriter in the world, understand every competitive threat facing a business, know exactly how to size a position — none of it does anything if the name never crosses your desk.

Today I want to walk through three more signals I use to find opportunities.

This one's simple on the surface. I screen for stocks trading at the lowest price they've hit in the past year.

To be clear: this is not a buy signal. A 52-week low just tells you one thing — there's been sustained selling pressure on this company for an extended stretch. That's it.

Sometimes the pressure is completely warranted; the business is actually deteriorating and the market's pricing that in correctly.

But sometimes selling that goes on long enough stops being about the business and starts being about momentum.

“Stock X has been going down for weeks, so it's a loser, so I'll sell it.”

Or: “it's been going down, it'll probably keep going down, so I'll sell to protect what's left.”

That's not analysis. That's a herd following its own footprints.

Part of this comes down to a basic quirk in how people think. Most of our intuition treats the current state of things as the natural, ongoing state of things — if it's going down today, it'll probably be going down tomorrow.

But markets aren't linear. They're genuinely, sometimes terrifyingly, nonlinear.

So what I'm actually screening for isn't "cheap." It's stocks whose price has decoupled from what the business is actually worth — where the selling has outrun the reason for selling.

The easiest tool for this costs nothing: Yahoo Finance runs a screener that lists names hitting new 52-week lows in real time. I check it regularly.

This signal alone won't tell you much. But paired with the next one, it starts to get interesting.

Closely related to 52-week lows is the sector screen — and if you run a 52-week low screen for long enough, you'll start noticing the same pattern: several names from the same sector showing up together.

Sector rotation is real. Capital piles into whatever's hot and drains out of whatever isn't, sometimes for good reasons, sometimes just because a sector's gone out of fashion.

This overlaps with the macro selloff signal too, since sometimes an entire sector gets hit by one event rather than any single company's own problems.

My method here: I compare sector ETFs — XLK for tech, XLE for energy, and so on — for pivot points. Charted over time, you can actually see the moment a sector stops falling and starts climbing. That, combined with recurring names on the 52-week low screen, is usually enough to tell me a sector's worth a closer look.

Here's where this actually paid off for me.

Back in 2019, I'd already clocked that oil was underpriced. The sector had been depressed for a while and the fundamentals didn't match the price. What I didn't have was a catalyst, or any sense of timing — knowing something is cheap and knowing when to act on it are two different problems, and I didn't have the second one solved.

Then Buffett bought into OXY (Occidental Petroleum). That was the confidence I needed to actually start entering the position myself. Not because I was copying his trade blindly — I already had my own thesis — but because his filing told me someone with a much longer track record than mine had independently landed on the same conclusion.

Then 2020 happened. Oil prices collapsed, and every producer in the industry slashed capital spending to survive. That capex cut mattered more than anyone was pricing in at the time — because when demand came back, there wasn't enough production capacity left to meet it.

By 2022, oil prices soared. Hedge funds had seen this coming and piled into producers ahead of the rebound. I made a hefty profit off that trade.

The kicker: OXY got so cash-strapped during the crash that at one point they paid dividends in stock instead of cash — which, on the way back up, only juiced my returns further.

That's the sector screen working exactly as intended: spot a sector priced well below its fundamentals, wait for confirmation, and let the reversion do the work.

The last signal is watching what people with real conviction and real capital are doing — 13F filings from investors like Buffett, Ackman, or Einhorn, and Form 4 insider buying and selling.

Legendary Investors

None of this is a "buy what they bought" shortcut. By the time a 13F or Form 4 is public, the trade already happened, often weeks or months earlier.

You have to understand why they bought — not just that they did — and then ask whether that reason still holds at today's price.

There's a real phenomenon sometimes called the "Buffett Bump," where a stock jumps the moment the market learns he's bought it. Chase that bump and you're not investing alongside Buffett, you're just paying a premium for his name.

This is exactly the role Smart Money played in the OXY trade above — his filing was the confirmation, not the idea

Insider Trading

A distinction that matters a lot here: I care much more about buying than selling.

Insiders sell for a hundred different reasons that have nothing to do with the business — a mortgage, a divorce, diversification, a scheduled 10b5-1 plan set up months in advance.

None of that is signal.

But insiders only buy for one reason: they think the stock is worth more than it's trading for. That's real conviction, put behind real money.

Important note: scheduled insider sales get misread as panic all the time, even when they're nothing of the sort — worth checking whether a sale was pre-planned before reading anything into it.

None of these signals work best in isolation. They're strongest when they stack.

A 52-week low in a sector that's also showing up on your sector screen, confirmed by an insider or a filing from someone with a track record worth trusting. That's what happened with OXY: sector screen plus smart money, together, at the same name.

Next edition, I'll walk through a current position where three of these signals just converged in real time — and what I did about it.