We’re on pace for our most volatile year since 2009—the tail end of the financial crisis.
And we couldn’t be happier…
You see, most investors fear volatility. Just look at these headlines from last month…
“Stop the market! I want to get off! Volatility is back” (CNNMoney, April 16)
“It’s a Scary Time to Be Trading Wall Street’s Fear Index.” (The Wall Street Journal, April 22)
“How to Get Over Your Fear of the Stock Market.” (USA Today, April 25)
At the Daily, we don’t fear volatility… We embrace it. That’s because we know how to take advantage of volatility.
Today, we’ll show you how to safely profit from the wild swings in the market (see our Chart Watch below).
We’ll also show you a way to turbocharge those gains (and introduce you to the guy we think is the best at using this strategy).
Volatility measures the amount of price change over a period time. Markets with bigger and more frequent price swings are more volatile than markets with smaller and less frequent price swings.
We’ve already had 31 trading days this year in which the stock market moved more than 1%. That’s the most since 2011. (And it includes a 1,175-point intraday move in the Dow Jones Industrial Average on February 5—the second biggest in the history of the index.)
These extreme moves scare many investors—especially after last year, when we only had eight days of major volatility.
Volatile markets are generally riskier. But experienced traders know that volatility can also provide more frequent and bigger opportunities to profit.
Buy the Dip
One way to profit from volatility is to “buy the dip.” That’s just market slang for buying a “drop in price.”
When you buy the dip, you’re getting stocks at a discount. But you shouldn’t just buy any stock after a dip. Bad companies may keep dipping.
At the Daily, we only buy high-quality stocks on dips. And with increased volatility this year, we’ve had opportunities to buy some great companies.
On March 30, we told you to buy Facebook on the dip. It’s up 14% in less than a month…
And on April 9, we told you to buy Amazon, Intel, and Google after they dropped due to volatility. Since then, they’re up an average of 8%…
Now, an 8% move might not excite you. But think about how quickly that happened.
In just two weeks, you could’ve turned $10,000 into $10,800. Try doing that in your bank account, with a CD, or with government bonds. It’s not happening…
But for those of you willing to take on a bit more risk, there’s a way to turbocharge those gains…
How to Squeeze More Profits From Dips
One way to juice your gains is to buy options. Stock options are contracts that give the buyer a right—but not the obligation—to buy or sell stocks at an agreed-upon price at a specific time.
We won’t get into all the specifics of options trading… But just look at what happens with the trades we mentioned above if you bought options instead of shares…
Instead of buying Facebook stocks on March 30, if you had bought the May 18, 2018 $155 call option on the open of the next trading day (April 2), you could have made a 50% gain. That’s triple the gain on buying the stock alone.
Another strategy would be to sell puts. When you sell puts, you collect cash up front. And if the stock closes above the strike price… you get to keep the money.
If you sold put options on Amazon, Google, and Intel on April 9 instead of buying shares, you’d be well on your way to watching them expire worthless… while keeping the upfront cash.
Here at the Daily, options aren’t our bag. We look for big macro themes to help you grow your wealth. So we usually don’t walk you through the intricacies of short-term trades.
But there’s one person who can…
Regular readers may be familiar with master trader and PBRG friend Jeff Clark.
Jeff is one of the best traders we know. For 25 years, Jeff traded the personal money of some of the West Coast’s top pro-athletes, CEOs, and Silicon Valley executives—making millions for his clients and himself…
Recently, Jeff told me that he believes we’re entering a period of extended volatility. And he’s excited about the money-making opportunities the market will give us.
That’s why on May 9 at 8 p.m. ET, he’s holding a training session to show people how to use his trading system. And he’s inviting Daily readers to attend the session for free.
Jeff says this system is the best way to play today’s market… and help you make 1,093% bigger gains than the average investor.
If you’re looking for a way to take advantage of volatility, click here to register for Jeff’s free training event. (As a bonus, Jeff will give away a free special report of his most valuable trading tools to everyone who attends.)
Nick Rokke, CFA
Analyst, The Palm Beach Daily
Another Chance to Buy the Dip
Today, I’m seeing another chance for us to buy a fast-growing company on a pullback.
This time it’s movie and TV show streaming giant Netflix (NFLX).
Netflix destroyed its earnings report in April… It grew revenues 41% and grew profits by 260% for the year… It also added 7.4 million subscribers in the first three months of 2018.
But market downturns rain on the good and the bad—and Netflix got caught up in the most recent one.
However, it’s turning the corner. The company just visited a support line at its 50-day moving average… Now, it’s bouncing back.
This is a great entry point to get into—or add to—a Netflix position.
Longtime PBRG friend Bill Bonner’s April 29 essay on free speech and censorship (“Why Google Threatened to Ban Us”) hit a nerve…
From Robert L.: Excellent article on critical thinking and freedom of speech by Bill Bonner. There’s an old saying, “It doesn’t pay to write too soon.”
Until an individual’s mind matures to think and speak freely, censorship will prevail. However, the outspoken may suffer to bring others the truth. May those of us who know better speak out… enduring the heat of the day so others can enjoy the shade of reason, understanding, and wisdom.
From Peter W.: From my point of view, the First Amendment is a joke. When listening to the news, it’s carefully crafted to create an opinion that the War Dogs want.
Do you think freedom of speech is under attack in the United States? Tell us why right here…
Have you seen this guy’s brutally honest message to America?
What the rich really think about stocks, immigration, political correctness, and money may shock you. Click here for details…