Is Joel Litman's LOCK System Legit?

Altimetry has been promoting a presentation with the heading:

“America’s Top ‘Stock Cop’ Warns: “Do This BEFORE You Get the Vaccine””

It has nothing to do with the side-effects of the vaccine although that’s what the heading implies. Instead, it concerns a series of investments Joel Litman thinks will either perform well or badly when the vaccine is administered to everyone.

In this article, I will identify the key points raised in the pitch worth your attention as well as a quick Hidden Alpha review to enable you to decide what to make of it.

Before I start…

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LOCK System Review

Table of Contents

Introduction to LOCK System

The LOCK System is a series of proprietary stock-evaluation mechanisms that Joel Litman uses to analyze the market. Once he implements these mechanisms, he knows what stocks to invest in and which ones he should avoid.

In a tell-all presentation he released recently, he tells us that he’s been using the L.O.C.K System to make big predictions and advise 8 of the 10 richest money managers.

He even says that some people in investment circles call him America’s top “stock cop” because he warned his corporate clients about the March 2020 crash, when the stock market pulled back 34% due to the coronavirus pandemic.

So, what does his trading system have to do with the vaccine?

He says that after evaluating the stock market, he thinks that when everyone has had the Covid-19 vaccine and the economy starts recovering, part of the high-flying tech-driven bull market will crash.

At the same time, another group of under-the-radar tech stocks will soar.

He says that when the pandemic hit, investors rushed to invest in companies that catered to the new “stay-at-home” trends. As a result those stocks were the best performing ones of 2020.

But with the vaccines all but ensuring that the virus will be vanquished and lockdown restrictions lifted, some of those stocks will drop in value. He expects some of them to drop by up to 75%.

However, Joel Litman believes that some of the “stay-at-home” trends will persist post-pandemic and the companies involved will become the new tech giants of the next decade.

As an individual investor, you will need to find these companies that will do well post-pandemic and avoid the ones that may fail to survive the recovery.

And that’s where the L.O.C.K System comes in:

“So how do you know which tech companies are just Covid fads?

And which will rule the post-Covid world?

That’s where I come in…

I’ve created a system – what I call the L.O.C.K. system – that separates the winners from the losers.

It’s like having an X-ray view into company operations. You’ll be able to determine how they really feel, behind closed doors.

I even developed a proprietary technology to decipher changes in pitch in the CEO’s voice during quarterly earnings calls.

This machine allows my firm to determine whether a CEO is feigning confidence and hiding skepticism. Or if they believe the story they’re telling.”

Since Joel Litman believes that companies in the stock market will be impacted differently, he uses the LOCK System to separate the stocks that may do well from the ones that may underperform in the new normal.

How Does The LOCK System Work?

The L.O.C.K system is meant to look beyond the GAAP-compliant financial reports that companies release to determine the true financial health of those companies.

Litman says that sometimes companies don’t disclose their true financial state or they sugarcoat the reality and that’s where the LOCK System and his forensic accounting technique comes into play.

“A forensic accountant can’t just accept numbers on their surface…

You have to prove discrepancies beyond a shadow of a doubt.

What does that have to do with the stock market?

Well, I’ve identified over 130 flaws and discrepancies in the general accounting standards used to keep the books of most American corporations.

These are the same numbers that are fed to the so-called experts.

But when you apply my specific accounting principles, correcting these 130 flaws…

The numbers – and the outlook for the stock – can change drastically.”

Litman is telling us that the Generally Accepted Accounting Principles (GAAP) are not perfect because he has isolated many flaws and discrepancies that are often used by many companies to hide their true financial health.

What does L.O.C.K mean?

LOCK is an acronym for

Locate. Litman examines stocks everyday to find the ones that are overvalued and those that are undervalued.
Operations. After narrowing the list down to 30-200 companies, he learns more about their operations to find out whether they are run well or badly.
Calls. He analyzes CEO conference calls using a lie-detector system called electro-audiogram (EAG). It analyzes the CEO’s voice patterns to determine whether they they are delivering factual information or are hiding something.
Kick it or Keep it. Litman divides his list into the companies that he will recommend and the ones he will avoid.

The Hidden Gems identified by Joel Litman’s Lock System

Joel Litman has identified a few companies capitalizing on the stay-at-home trend that he expects to thrive even when the economy fully reopens.

Here is what he says about them in the presentation:

“Over and over again, the L.O.C.K. system makes fools of the mainstream media… and turns the conventional wisdom on its head.

I’ll explain more about the nuts and bolts of L.O.C.K. in a moment.

But I have more urgent information to share first.

I put every stock in the market through L.O.C.K. once a week.

And last week, I found a few surprises.

Some of the most popular “stay-at-home” stocks are on the verge of ruin.

And quite a few under-the-radar companies are poised to become big winners in the post-Covid world.

It all centers around a vaccine. And the huge money shift that will take place as a result.

The sooner Covid-19 is snuffed out – the sooner these companies will crash.

And by that time, the new tech giants I’ll tell you about today – will likely be far more expensive.”

Each of these “new tech giants” are capitalizing on a trend, and Joel has identified three of these trends (he calls them “enduring habits”).

They are:

Online Retail
Working from home
Entertainment has changed forever

Let’s examine the trends Joel is referring to and the companies he singles out:

Online Retail

When the pandemic forced governments to enact lockdown protocols, people had no choice but to shop more online. Companies like Amazon did particularly well during this period.

Joel thinks online shopping will still be prevalent even after the pandemic. However, the L.O.C.K System has singled out a couple of stocks to avoid because they don’t have sustainable cash flow.

They include Door Dash (DASH), UPS (UPS), FedEx (FDS), and Domino’s Pizza (DPZ).

What of his recommendations?

All the details about them are in a report called The Giants of Online Shopping, which you get when you sign up for his Hidden Alpha newsletter.

But you don’t need to subscribe because I have uncovered the names of the two companies.

The first one is a company that offers remote payment infrastructure. Here he is describing it in the presentation:

“…this company’s proprietary technology is at the heart of the remote payment business.

They’ve been around almost as long as the internet.

On average, their software handles 41.5 million transactions every single day.

That amounts to over $20 billion in remote payments every week.

8 in 10 online buyers use their technology – even if they don’t know it.”

This description fits a company called Global Payments (GPN). It is an old company that was founded in 1967 with headquarters in Atlanta, GA.

It was a credit card processing company and I chose to go with it because it has definitely been around as long as the internet.

Global Payments provides payment processing services and software solutions to merchants.

The second one is in cloud computing,

“…this second company is a one-stop shop for cloud computing, AI and data storage.

Making it massively important to the online shopping universe.

Apple pays them $30 million a month to run its massive cloud.

Netflix paid $19 million a month during the pandemic to keep its streaming service up and running.

Facebook forks over $11 million every month…

Over 100,000 companies as diverse as ESPN, Pfizer, Zillow and McDonald’s would shut down without the company’s cloud services.”

This to me looks like Amazon (AMZN).

Amazon is not just a retail giant, it has other business interests and one of these is its cloud computing business, Amazon Web Services (AWS).

Working from home

When people were forced to stay at home due to lockdown restrictions, they had to work remotely because going to the office was out of the question.

Joel Litman even did a presentation titled Office Doomsday about the office model going extinct.

Many companies are considering allowing their employees to work from home more (either fully or partially) even when offices reopen at full capacity.

Joel advises you to avoid Zoom Communications (ZM) because he thinks that it is overvalued.

Instead, he recommends companies offering internet services.

He wrote a report called The 3 Pillars of the Internet about his recommendations and you can get a free copy if you subscribe to Hidden Alpha.

But you don’t have to because I reveal their names here.

Onto the first company:

“A company who rakes in $38 billion a quarter from its multiple businesses. Its hands are in every aspect of the future of the internet, from cloud computing to Internet of Things, online video streaming and digital advertising.

Most importantly, they offer businesses a full suite of services – think Microsoft, Zoom and Slack all rolled into one.”

This one strikes me as Alphabet (GOOGL) because of the sheer numbers involved. It has been hitting the $38 billion range in terms of quarterly revenue.

Google owns YouTube, a powerful video streaming platform and it is in digital advertising (Google Ads and search).

What of the second recommendation?

“This cloud storage company proved so popular with at-home workers that 1 in 5 used this service – even when it was banned by most corporate IT departments. L.O.C.K. sees huge upside in the future hybrid work environment as workers use its products at home and in the office.”

The second company sounds like Dropbox (DBX), which offers cloud storage services. It is directly competing with Microsoft and Google in cloud storage and it is very popular with employees.

The third recommendation:

“The largest internet service provider in America with 26 million subscribers has huge room for growth throughout the country thanks to its proprietary high-speed internet technology.”

This one is probably Charter Communications (CHTR). It is a telecoms and mass media company with a subscriber count of about 26 million in 41 states.

It is the second largest cable operator, only second to Comcast.

Entertainment

In the entertainment niche, there are three companies Joel Litman wants you to go for.

He has a report about them called 3 High-Flying Home Entertainment Stocks to Buy Now. that you can only get a free copy of if you subscribe to Hidden Alpha.

They deal with streaming, gaming, and home entertainment.

Joel believes that movie theaters are under threat because of streaming services, which he expects to take over the movie industry. To be fair, we’ve already seen a few major releases debut on streaming services rather than the big screen.

What are these three companies?

The first company is in streaming:

“Revenue is $1.6 billion monthly…

They have one of the largest libraries of movies. And new, original content coming every month.

This up-and-comer has the highest rate of subscriber growth too… 22% year over year.

L.O.C.K. suggests they will dominate video streaming for the next decade and beyond.

This is perhaps the #1 tech stock in the market.”

This one could be Netflix (NFLX).

The problem with it is that doesn’t quite fit the description because it is far from an up-and-comer. It is the leading streaming service in the world and Litman could have just described it like that to throw us off the trail.

Other than that, it fits the description because in 2020, it grew its subscriber count by 22% year over year and it is perfectly positioned to dominate the video streaming market.

What about the second company?

“This company is a play on both the home theater and public movie theaters.

You see, they’re a key player in how your movies sound.

On top of that, they own over 8,100 patents related to all types of advanced theater systems.

Even if you don’t buy their brand, you’re likely still paying them for their technology.

Revenues have cleared $1 billion in each of the last two years. And as long as people watch movies, this company will get paid.”

This one is probably Dolby (DLB), which specializes in audio noise reduction and audio encoding and compression.

It licenses its tech to consumer electronics makers and as of 2017, it had over 8,100 patents, just as Joel Litman says.

The last one is in the gaming sector:

“L.O.C.K. has unearthed one gaming company with room for massive growth going forward.

They’re a key player in the $175 billion a year gaming software industry.”

Unfortunately, I don’t have a lead on this one because the clues are not descriptive enough.

Who is Joel Litman?

Joel Litman is an investment advisor and the founder of Altimetry. He is the editor in charge of Hidden Alpha, among other research services.

Altimetry is a boutique investment research firm that provides investment advice to retail investors through financial newsletters.

Joel Litman is also the Chief Investment Strategist and Managing Director at Valens Securities, Inc. and Valens Research. Valens Research offers institutional investors with research solutions.

In addition to leading those two independent firms, he is also on the board of an Asian brokerage firm called COL Financial Group.

His specialty areas are equities, macroeconomic strategy, and corporate credit.

He graduated from Waterville High School and got his BS degree in accounting from DePaul University. He got his MBA degree from Kellogg School of Management.

Joel Litman is a CPA and a member of the CFA Institute and the Association of Certified Fraud Examiners.

Joel has taught or guest lectured at a number of universities, including Wharton, University of Chicago Booth, and Harvard Business School, just to mention a few.

His work has been featured on CNBC, Forbes, and Barron’s.

Hidden Alpha Review

As we saw earlier, Joel has identified three pandemic trends that will survive post-pandemic.

In each trend, he has found companies he expects to benefit and he wants to recommend them to you if you sign up for his newsletter, Hidden Alpha (you can read my in-depth Hidden Alpha review by following that link).

Hidden Alpha is an advisory service that is published by Altimetry and edited by Joel Litman. He shares recommendations that are gleaned from the L.O.C.K System.

With Hidden Alpha, the focus is on large cap stocks that have the opportunity for big gains. And it adds up because you will notice how each of the stocks in the teaser are large.

Here is what you get when you sign up for Hidden Alpha:

12 monthly issues of the Hidden Alpha newsletter. Each issue of Hidden Alpha has the latest research and recommendations with information on how to put it to use in your portfolio.
Access to the Hidden Alpha model portfolio. Every recommendation shared is in the model portfolio

A Hidden Alpha review would be incomplete without talking about the customer support. Your Hidden Alpha subscription comes with access to a team of reps who answer any question you may have about Hidden Alpha.

Special Reports

As we saw earlier, Joel Litman has written special reports about the major market trends he wants you to capitalize on. The three reports and the trends they cover are available for free when you become a member of Hidden Alpha. They are:

The Giants of Online Shopping

This is the first report you get when you join Hidden Alpha.

In this report, he names the companies that will benefit from the online shopping trend. He expects people to carry on shopping online and he has two recommendations that I revealed earlier in this article.

The 3 Pillars of the Internet

In this one, the surviving trend will be working from home. He expects us to continue working remotely partially or entirely (depending on the employer) and has named three companies that will provide high-speed internet to make this possible.

3 High-Flying Home Entertainment Stocks to Buy Now

The trend in this one is home entertainment. He recommends three companies that are in the streaming, online gaming, and home theater (sound systems for home entertainment) businesses.

In addition to the three reports, Joel has a a fourth report called 14 Fad Stocks to Sell Before You Get the Vaccine that names 14 companies that he thinks won’t do well post-pandemic.

You will get access to these reports only when you subscribe to Joel’s monthly newsletter, Hidden Alpha.

In addition to the four reports, you also get a fifth one called How to Be a Stock Cop: The Secrets of the L.O.C.K. System.

In this report, Litman explains how the LOCK System works in greater detail.

What is Hidden Alpha Subscription Fee and Refund Policy?

Hidden Alpha costs $49/year and has a 60-day money-back guarantee

I should clarify that it costs $49 if you join Hidden Alpha via the link provided at the end of the presentation and you can cancel the subscription for a full refund within 60 days of joining.

Normally, a Hidden Alpha subscription would cost $99 but if you sign up through the presentation, you get a one-year subscription for $49. You can read more about it in my Hidden Alpha review.

Is L.O.C.K System Legit?

Yes, the L.O.C.K System is legit and so is the Hidden Alpha advisory service.

Joel Litman is an investment guru who runs a stock research service (Valens Research) that has served some of the biggest money managers in the world. He employs forensic accounting to his stock analysis routine to find companies in good financial health. This system is just an extension of that.

That being said, he is not immune to making the wrong calls because all investments have risk and some of Joel’s recommendations will not perform as expected.

L.O.C.K System Summary

The covid-19 pandemic has created a new normal — a way of life where people are confined to their homes. As a result, companies that tend to people’s needs while they spend more time at home have flourished.

However, with the vaccine likely to end the pandemic, Joel expects some of these companies to lose their allure and stock value. Meanwhile, some will thrive beyond the pandemic and become big companies. He has created a system (LOCK System) to tell which companies belong to which of the two categories.

He wants to share his findings with you if you sign up for his newsletter called Hidden Alpha.

Before you leave

If you’re tired of scams and want a real solution for making money online check out my no.1 recommendation.

It’s helped me earn over $300,000 in the last 12 months alone:

Go here to see my no.1 recommendation for making money online

(This is a 100% free training)