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These are some of the most volatile markets I’ve ever seen. Down 630 points on the Dow Jones one day. Up 430 points the next.
And that’s not all! We’ve seen $50-$70 daily moves in gold … 8-cent moves in the value of the Swiss franc … $25 collapses in the price of oil in just a few days. It’s enough to make your head spin!
Me? I’m not running and hiding! I’m EMBRACING the volatility! And I recommend you do too — because volatility like this presents some of the biggest profit opportunities of our lifetimes!
What’s Causing the Volatility Wave —
And How to Surf It!
By now, you should be wholeheartedly aware of my bearish, big-picture, fundamental outlook. I have repeatedly warned in the past several months to dump most stocks … dump all REITs … buy gold … and buy inverse ETFs that rally when stocks fall.
My view: This multi-pronged strategy would help prepare you for a double-dip recession, second “top” in real estate, and second phase in the great credit crunch. Sure enough, each and every one of those strategies is now paying off — in aces and spades!
Late last week and Monday, for instance, the market collapsed. We got the sixth-biggest, one-day point decline in Dow history. Fear gauges surged, banks collapsed, and everything from junk bonds to REITs imploded.
So what did I do?
I took profits on several positions that I put on BEFORE the crisis. And not tiny ones either — subscribers to my services enjoyed gains of as much as 100 percent in two months, and 31.1 percent in 10 days, depending on the investment vehicle and strategy.
Why take so much exposure and so many profits off the table? Because I knew we were finally seeing whiffs of real panic, and because my technical indicators suggested we were due for a short-term, potentially serious bounce.
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| Did I panic when the market slid 630 points one day then shot up 430 the next? Heck no! I snagged big profits. |
Then what happened? On Tuesday, the Federal Reserve came out and pledged to keep interest rates low through mid-2013. That ignited a rally of several hundred Dow points from the intraday low.
Never mind that the Fed pledge was well telegraphed, and one of the least powerful of all the options policymakers had on the table. It still “worked” from Ben Bernanke’s perspective, which I’m sure was to goose the stock market after its epic collapse.
Because they took so many profits off when things looked much uglier, though, my subscribers weren’t really hurt. They sailed right through the volatility. Better yet, they now have fresh ammunition to use when the next oversold rally strikes.
Major Takeaways from
This Play-By-Play
Why am I walking you through this trading “play-by-play?” Because if you want to protect your wealth — and profit — in these kinds of markets, you have to understand how to surf major volatility waves! It is absolutely imperative NOT to just buy and hold, but rather to add inverse positions on rallies and take profits into declines.
That was what worked in 2007-2009, and it’s what will work this time. I say that because conditions are very similar now to what we saw then. Only now the locus of the credit crisis is sovereign bonds, countries, and currencies, as opposed to private banks, brokers, home builders, and the like then.
Finally, for those of you who are not comfortable with a more rapid trading pace, let me just say this: You do NOT see these kinds of hugely volatile moves in a bull market. You see them in bear markets — like 2000-2002 and 2007-2009.
I believe that’s what we re-entered this summer, and that we won’t exit it again for a long, long time. So invest and plan accordingly!
Until next time,
Mike
P.S. Want to know why the markets are going crazy? Want to know what’s driving stocks, bonds, currencies, and commodities? Want to learn how to get YOUR taste of the kinds of profits I referred to above? Then click here to view my free American Apocalypse video for all those answers — and more!
{ 6 comments… read them below or add one }
Sure Mike, you “embrace” all of this. You are a professional TRADER (and some would say a “traitor”), while most of us merely want to invest in stable, profitable companies, and wish for a stable and profitable future for our Country. For every one of you “traders” who are making money in these corrupt markets, another is losing it in this “zero sum” game. Yesterday’s news noted that some European countries are even beginning to discuss outlawing “short” trading. When enough people are likely to get hurt so a few can get rich, something has to be done. May the time come when fast trading profits are so heavily taxed as to seriously discourage this activity, with the tax going to support increased regulation and supervision. Note that Canada did not have our receent “banking crisis”. You might have to get yourself a real job…
goverment sould leave maket alone short sale take same risk at long
@Hanrod… What color’s the sky in your world ? You blame the messenger.
Excellent work Mike !
Blue, Copeland, just like yours. Not blaming Mike at all; the game is what it is, it is currently the only game, and one either plays or does not. I do not, and will not again, until the rules are transparent, and enforced.
The news today reports both investors and companies sitting on mounds of cash, like me, even though it is doing them (and us) little good at present. Things are going to get much “worse”, not better, and then we will see some changes. Maybe the new rules will be an improvement, but there is no guarantee of that, either. Still, what we have is certainly not working.
Unless you think that you are an expert, you would be wise to stay out of this for now, just like me.
Mike,
Some of your readers do not understand neither why or how markets operate. They seem to pine for a market that never was nor will ever be. The volatility we see today is nothing unusual and to lament the fact that wild swings in the market are the maschinations of speculators out to manipulate the hard earned money saintly investors is just plain wrong. All attempts to create “put-you-to-sleep” markets is doomed to fail because the factors contributing to markets are always in a state of change. The problem is that the most violent episodes in history occur when most folks believe that the status Quo will never be altered.
Your commentary is to be commended in that you and Weiss research want to give the unvarnished truth for your subscribers. As a high risk speculator and gambler I do not bet on certitude but only on probabilities that may produce unusual rewards. When averaged out it works wonders that no certitude can ever produce.
Hi Mike
This secular bear market which started in 2000 has only a short time left to run and is expected to finish in 2012. As some know, that is when countries are successfully addressing their sovereign debt issues and the flowers less weak fall to the ground. Then we start the long process back into a sustained bull market. This would be a good time for the lower risk takers to be cashed up and enter the market.
Regards