Fear is back in the stock market. It’s one of the few “assets” that has worked all year…
After plunging 10% from its September peak, the S&P 500 Index is down about 4% for the year… So-called “safe” Treasury securities are down nearly 7% as measured by the iShares T-Bond Fund (TLT)… And even the safe haven of gold is down about 6%.
But volatility – as measured by the CBOE Volatility Index (“VIX”), known as the market’s fear gauge – is up more than 100%.
That doesn’t mean that the bull market or the Melt Up that we’ve talked about a lot here at American Consequences is over.
But it does mean that you should be cautious right now. Carefully consider your overall risk in your portfolio. How much can you afford to lose if a stock drops… or if the “big one” hits the market?
And you might also consider a few ways to profit if stocks go down…
One way to do so is to short a stock. That’s when you borrow shares upfront to then sell into the market. Then you want the price of shares to go down so that you can buy them back at a profit.
However, when you short stocks, you must foot the bill for any dividend it might pay. And sometimes it can be difficult to find shares available to borrow if the company is in serious trouble.
But there’s a different way to make money when share prices go down that doesn’t have this challenge…
On Monday, American Consequences feature contributor Dr. David Eifrig sent out an e-mail to a list of folks who joined his secret project.
He and his research team have been developing a strategy to boost your gains on essentially any stock you were interested in buying… creating the opportunity to double or even triple your profits even if a stock only goes up a few percent.
They make these trades using a part of the stock market that few investors venture into… And even fewer use it in a manner that reduces risk and increases potential profits.
But Monday’s e-mail had a twist to it…
They focused on a doomed stock – a car-rental company with an aging fleet, increased competition, and an unsustainable debt load. And they figured out a trade that will return 100% as this company’s stock price declines about 10% over the next five months.
Now, this trade isn’t one of their core strategies. They’re mostly focused on making 100%-300% gains when stocks go up.
But it is a very interesting way to look at the market and potentially use to hedge your portfolio. If you’re interested in learning more about the profits that Dr. David Eifrig and his team can help you earn, click here.
Now on to the latest news…
The market is looking increasingly tense… And more folks are starting to warn about a downturn. But keep in mind that normal corrections usually feel much worse than they actually are…
U.S.-China trade tensions, signs of slowing global growth and central-bank tightening have roiled stocks, fixed-income securities, and commodities. Meanwhile, a potential yield-curve inversion in the bond market, where shorter-dated bonds yield more than longer-dated ones, has caused concerns of a looming economic recession.
245 stocks in the S&P 500 – 49% of its components – on Monday had fallen 20% or more from their 52-week highs. Another 127 S&P 500 stocks had fallen 10% or more from their 52-week highs, but less than 20%.
“I think things have improved, but then I think there are gigantic holes in the system,” Yellen said Monday night.
You might wonder why I’m so confident in such a tough environment. The reason is that I can tell you when the Melt Up will end… and when the Melt Down will arrive.
Watch our own American Consequences feature contributor and New York Times bestselling author Turney Duff speak in Hickory, North Carolina about his life, his time on Wall Street, and finally achieving happiness and balance…
Turney Duff shares his tales of spectacular excess while illuminating the consequences of predicting future emotions. He always believed that IF he got “X” THEN he would feel “Y.” And he explains how and why he no longer subscribes to that theory.
You won’t be surprised to hear that the five richest counties in the country are right outside Washington, D.C.
The big get bigger, the rich get richer, the more powerful get more powerful — all in a place many Americans disdain or distrust.
And these types of bribes… and worse… will be promised by U.S. presidential candidates as we near the 2020 election:
After a month of a sometimes violent revolt by Yellow Jacket protesters against fuel tax hikes and the cost of living, Macron announced an immediate €100 a month increase in the minimum wage without extra cost to employers… He gave no clue as to how he would finance the concessions.
This kind of inflation means that a former $50 dinner is now $500,000… and it’ll be $5 million next year. This is the reality of what socialism brings…
Socialist President Nicolas Maduro late last month increased the monthly minimum wage by 150% to 4,500 bolivars, fewer than $10 at the black market exchange rate. Citizens had complained that they could not afford basic items despite a previous 60-fold minimum wage increase in August.
And let us know what you’re reading at [email protected].
Publisher, American Consequences
With P.J. O’Rourke and the Editorial Staff
December 12, 2018