What Is The 7 Day Stock Market Glitch? [James Altucher]

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James released the presentation claiming that he had developed an AI-based trading system that can consistently earn short-term returns in all market conditions.

But is there any substance to his claims?

In this article, I will be taking a closer look at what he means by a “stock market glitch” and how he lands his trades to enable you to decide whether his investment newsletter is worth a punt.

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Table of Contents

What is the 7 Day Stock Market Glitch?

The “7 Day Stock Market Glitch” is the title of a pitch that James Altucher released earlier this year promoting his Weekly AlphaBrain Alert investment newsletter.

In it, James claims that the stock market has events that he refers to as glitches that you can exploit if you know the right move to make.

They typically last a brief period before they self-correct, although in some cases, they can last for a few days thus allowing you to make money if you identify them in time.

He claims that those events are undetectable unless you have the right software i.e. you cannot detect them merely by studying the market unaided.

According to Altucher, these glitches can be caused by human error, irrational investor behavior, illegal wash sales, and rapid spikes in market volatility.

However, he claims that the most common cause is “automated execution algorithms.” He says that sometimes, computers execute an order to sell and hold an asset simultaneously, which creates an error.

What is AlphaBrain?

James figured that since you cannot realistically spot those errors on your own, you need to have a computerized system that does it for you.

Since is well-versed in software development, he decided to work on a code that detects those errors for him.

On his official investment services website, Choose Yourself Financial, James describes how he and two other experts developed AlphaBrain:

“I’ve been working on a code — an artificial intelligence algorithm — that delivers consistently profitable short-term trades… perfect for regular stock trading or for leveraging options for maximizing gains.

I even reached out to a mathematician and Harvard quantitative financial analyst to “stress test” the code using every market condition conceivable.”

The AlphaBrain algorithm uses AI.

Artificial Intelligence appears to be finding its way into the financial markets. For example, the past ten years have seen the rise of roboadvisors, which are AI-based platforms that provide a wide range of investment services.

On the website, Altucher claims that AlphaBrain is effective in all market conditions, including downturns:

“In some of our stress tests, we’re averaging 715% gains per week. Even in market downturns, we’re STILL averaging 179% per week.”

I suppose he said that to convince prospective clients of its ability to make money in a recession, such as the one we saw during the coronavirus market crash.

The “7-day stock market glitch” came about because James says that most of the trades that he finds take 7 days to earn a return.

How does AlphaBrain Work?

To spot the 7-day stock market glitch, the AlphaBrain scours the market using its AI algorithm. When it spots a glitch, it alerts James who then evaluates the trade using his experience to determine whether it is a worthwhile opportunity.

When he finds a potentially profitable investment, he alerts his subscribers via email, telling them to take advantage of the opportunity.

A few days after that – approximately seven days – he alerts them to close their positions.

He recommends options rather than stocks:

“And because the profit window for AlphaBrain’s trades lasts seven days on average, I’m going to recommend buying options to potentially up your gains 100-fold, all while lowering your risk.”

Who is James Altucher?

James Altucher is an author, software developer, podcaster, entrepreneur, and former hedge fund manager.

Altucher is a software developer; one of his biggest projects was being part of a team that created the “Deep Blue” chess-playing algorithm that beat the world chess champion. He also collaborated with Kai-Fu-Lee on an Artificial Intelligence project – Kai-Fu Lee is a leading computer scientist credited with helping develop modern AI systems.

He shot to fame when he published his book, Choose Yourself, which was on the Wall Street Journal bestseller list. In it, he pointed out that we can no longer rely on “the system” to be successful and that we need to find alternative routes to self-fulfillment.

Altucher followed Robert Kiyosaki’s footsteps by becoming an investment guru. Robert, the author of the bestselling Rich Dad Poor Dad, leveraged the success of his self-help book to venture into the world of investments. He later published The Lazy Way to Invest in Real Estate.

James once worked with a popular quant hedge fund manager called Victor Niederhoffer, and together, they developed algorithms that beat the market. He learned most of what he knows about investments from Victor.

What is The Weekly AlphaBrain Alert?

The Weekly AlphaBrain Alert is an investment advisory service that James launched to enable him to share his AlphaBrain findings with willing investors.

When you subscribe to the Weekly AlphaBrain Alert, you receive:

Weekly recommendations: Every week, you receive “glitch detection alerts” with details on what and when to buy or sell.
VIP Text Message Alerts: You can be receiving SMS alerts along with the emails if you choose to.
Access to the VIP customer support team
Free special reports whenever he releases them.
Unadvertised bonuses
Free subscriptions to daily e-letters like The 5 Min. Forecast, One Last Thing, and Altucher Confidential.

Subscription Fee

One year of Altucher’s Weekly AlphaBrain Alert costs $5,000

Refund Policy

Unfortunately, this newsletter doesn’t have a refund policy.

7 Day Stock Market Glitch Conclusion

Here are the key takeaways from the presentation:

The “7-Day Stock Market Glitch” is based on taking advantage of self-correcting glitches to earn returns.
These glitches are mainly caused by “automated execution algorithms,” which are system malfunctions of computers that trade on behalf of humans. But besides them, there are human-related factors like human error, investor irrationality, and illegal wash sales.
James Altucher claims that he has an AI-based algorithm called “The AlphaBrain” that spots those glitches, allowing him and his readers to exploit them.
Altucher trades options because they are suited to his short strategy and they yield higher returns.

James built an investment subscription service around the AlphaBrain called Weekly AlphaBrain Alert through which he shares his findings with interested investors.

Remember that it is an options-trading service; so, if you are uncomfortable trading them, it is not for you.

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