One Big Problem with How People Use TradeStops

BY KEITH KAPLAN CEO, TRADESMITH

In the 20 years since we launched our risk management software TradeStops, well over 100,000 investors have access to use it.

I applaud them… and not just because they help keep the lights on!

TradeStops was designed to solve three problems that investors face:

1. Knowing when to buy
2. Knowing how much to buy
3. Knowing when to sell

Most investors don’t know they even have these problems. They stick to a simple template or just do what “feels right.”

But I can tell you from studying thousands of portfolios over the years… if you’re reading this – YOU have these problems.

We are emotional beings at our core. It’s not a natural thing to fight. So we all need discipline.

And that’s why using your TradeStopssubscription is so darn important!

Look, if I had my way, every investor the world over would use it. It would mean a wealthier, better informed, and less emotionally stressed society. Who wouldn’t want that?

But there’s a big problem with most of our current TradeStops subscribers.

Check this out…

Of those 100,000+ TradeStops users, about 29% of them have never synchronized their portfolios on our software platform TradeSmith Finance.

In other words, close to one-third of the people who pay for TradeStops are not maximizing their benefits by using it THE RIGHT WAY.

This is the equivalent of paying up front for a year of Netflix (NFLX) and then never watching a single movie or episode of television.

Only it’s worse than that… because not watching Netflix doesn’t raise your risk of blowing up your portfolio.

Every conference I attend, I hear two types of feedback:

1. I’m so thankful for TradeStops because…
2. I wish I used it; I’m really screwing up.

When you pay for TradeStops and don’t use it, you’re paying to ignore a proven risk management system. Worst-case scenario, you’re actively paying to lose money.

That’s not what we want.

The more people who use TradeStops (and not just pay for it), the better prepared our subscribers are to face tough market environments like we’re in now. And that’s our entire mission at TradeSmith.

We send TradeSmith Daily to hundreds of thousands of people, including every TradeStopssubscriber. So there’s a chance that you’re reading this, and you’re one of the 29% who hasn’t synced your brokerage account with our software.

Let’s remedy that. If you’re one of the 29% who subscribes to TradeStops and doesn’t use it, click this link for a helpful guide on how to get set up. Mike Burnick also does a quick walkthrough in this edition of Inside TradeSmith, a free publication you receive with your subscription.

It should take less than five minutes to keep you up to date so you don’t have to constantly monitor your portfolio.

But this isn’t the only thing I want to talk about today…

A Big Concentration Trend

You’ve probably noticed that the stock market isn’t doing too hot lately. But what you might not know is that this problem is mainly limited to the United States.

While U.S. stock benchmarks like the S&P 500, Nasdaq 100, and Dow Jones Industrial Average are all down in 2025… lots of foreign stock markets are up, and individual stocks in those markets are up a lot.

There are a lot of reasons why this is happening, and they aren’t exclusively related to tariffs.

But no matter what the reason, the simple fact is most American investors are not positioned for this shift whatsoever.

I just read some research published late last year that looked at retail order flow and determined the stocks individual investors bought the most in 2024. It’s a who’s who of American tech stocks and benchmarks.

1. Tesla (TSLA)
2. Nvidia (NVDA)
3. Apple (AAPL)
4. The S&P 500 ETF (SPY)
5. The Nasdaq 100 ETF (QQQ)
6. Meta Platforms (META)
7. Amazon.com (AMZN)
8. The 3x Leveraged Nasdaq 100 ETF (TQQQ)
9. Advanced Micro Devices (AMD)
10. Netflix (NFLX)

This doesn’t surprise me. Americans have what’s called a strong “home country bias” with investing. We like to own American companies. And we should! Placing a stake in our biggest and best enterprises is a great way to benefit from, and therefore come to love, this great American experiment.

But the problem with this is another bias, called “recency bias.” This is when what most often worked in the past is believed to keep working indefinitely.

The Magnificent 7 was a major theme coming out of the 2022 bear market. But so far this year, it’s been more like the Lag 7.

The only Mag 7 stock above that hasn’t lost money in 2025 is META, and it’s basically flat.

But you know what IS up this year? Stocks outside of the United States.

Take a look at this chart of the S&P 500 (light purple line below) compared to a bunch of different countries’ ETFs:

China is running away with the bulk of the gains, up 29%. But also check out Chile (ECH), Germany (EQG), Europe (IEV), and Brazil (EWZ). All of these regions are posting major year-to-date returns while the U.S. (SPX), Argentina (ARGT), and India (INDA) – former hot trades – are all down.

This is yet another recency bias, and a much stronger one. Non-U.S. stocks have vastly underperformed for years. But not in 2025. And that’s what has caught investors flat-footed.

Will this continue? Maybe. In a technical sense, non-U.S. stocks are breaking out from a long downtrend against U.S. stocks.

Below is the Vanguard FTSE All World ex US ETF (VEU) compared to the SPDR S&P 500 ETF (SPY). This ratio has been in a long downtrend stretching all the way back to 2014… with support/resistance established back in 2008…

But now it seems to be breaking higher:

Now, nobody knows if this trend will keep expanding. History shows that betting against American exceptionalism has not been a good idea for many years.

But when I saw so many investors concentrated in stocks that are not working right now… it felt worth bringing up.

If you’re heavily in U.S. stocks and want to balance things out, consider taking some profits in your big gainers and allocating a small portion of your portfolio to a non-U.S. basket like VEU. If this trend continues, you’ll be glad you did.

And please, whatever you do, make sure that you’re actively using your TradeStopssubscription. If you were, you would be out of at least TSLA and AMD from the list above and probably quite a few more names that this market has punished.

Make your portfolio start working for you with TradeStops today.

All the best,

Keith Kaplan
CEO, TradeSmith

P.S. I recently started posting on X, @KeithTradeSmith, and I’d love for you to follow along and join the conversation.

I’ll be sharing some stock ideas, new screens and strategies we’re testing out, and some of my own principles for investing that I’ve developed over the years.

It’s completely free for you to access and always will be! Look forward to seeing you there.