Of all natural disasters, earthquakes are among the most disruptive. The ground beneath us turns unreliable and frightening.
The foundations of weak buildings crumble. And innocent bystanders can easily be caught and trapped in the rubble.
Now, many of us will be lucky enough to never live through a serious earthquake…
But as we saw last year… Sometimes the financial markets experience shockwaves that can drop the bottom out of your stomach and wreck your retirement.
Especially when you log in to your brokerage and see a bright-red -65%… or more.
The worst part is… Just like an earthquake, a crash like 2022 often comes with aftershocks that can be worse than the initial drop…
I know because I’ve lived through multiple market upsets. I’ve been a professional trader for over 35 years, including several decades on Wall Street.
During my career, I managed an $800 million hedge fund. That means I’ve had a front-row seat to the chaos.
So to show you what I mean, let’s take a look at the history books…
Among the infamous market crashes, few can forget the 2000 tech bubble burst.
The rise of the internet brought about a wave of companies whose success was linked to the “dot-com” in their names rather than any fundamentals.
And when that euphoria ended, it ended hard. The Nasdaq dropped 76.8% by the time it hit rock bottom.
Even worse, it took over a decade for the S&P 500 to return to the highs of 2000 and successfully maintain those gains.
And in the years following the 2000 crash, many stocks continued to give investors a wild ride.
Just look at Cisco Systems (CSCO)… Prior to the crash, this tech darling was a stalwart holding of many portfolios in the ’80s and ’90s.
Following the crash, however, CSCO fell over 89%. Take a look…
From that low in April 2001, it rallied 83% into May. Many people likely thought they were on the way to making back all their money.
But then the stock fell over 33% into June.
It rallied 23% into August…
It fell 41% into October…
It rallied 87.5% into November…
After all of that, the shockwaves began leveling out… slightly. But there were still significant aftershocks in the years that followed.
In 2002, Cisco’s stock fell over 62% by October. And then from its low, it rose 264% to its high in January 2004.
Again, many investors likely rejoiced, thinking it was all coming back.
But the triumph didn’t last. CSCO then fell again by nearly 40% over the next two years.
Anyone who was blindly buying and holding this stock was surely saying one thing… “Get me off this ride!”
And this kind of volatility in the wake of major market declines is a big part of the reason I’m not a buy-and-hold investor.
I’m a trader. And I know a far better – and less stressful – way to outperform in this kind of environment…
Because some people are guessing it might take a decade to recover from 2022’s bear market – like billionaires Stanley Druckenmiller and Ray Dalio.
I’m not quite that pessimistic… But no one really knows.
One thing’s for sure, though… Few of us can afford to passively sit on the sidelines with our fingers crossed.
A Shockwave on March 17
As my longtime followers know, options are my bread and butter.
And one of the reasons I use them is that they work even in rough times. Because options allow you to play the market whether it’s up… or down.
That’s a potent ability when stocks are whipsawing both ways.
Some people think options are risky…
And they’re right – if you don’t know what you’re doing.
But like I said earlier, I’ve been trading for over 35 years. And recently, I’ve been sharing many of my trading strategies with folks of all trading experience levels.
And that includes how to use options to control your risk… and amplify your profit potential.
Because right now, it’s more important than ever to know how to ride out these aftershocks… and come out the other side with profits in hand.
And there’s little time to lose.
Right now, I see another of these shockwaves about to hit the market on March 17.
But I know how to use the coming volatility to double your money – or potentially even more – if you act before that date.
That’s why I’m preparing a special event to share one of my favorite strategies… including the one ticker I’m planning to use to trade this next shockwave.
I’d like to invite you to join me on Wednesday, March 8, for that event. All you have to do is RSVP with one click to save your seat.
Editor, Trading With Larry Benedict