Nick’s Note: For decades, PBRG guru Teeka Tiwari witnessed people deep in the investment business make untold millions using safe, alternative strategies he discovered during his time on Wall Street.
Teeka used to reserve these high-level strategies for his high-net-worth clients when he was a hedge fund manager. And if you want to live a comfortable life, you owe it to yourself to learn about them.
That’s why today, we’re talking to Teeka’s handpicked income analyst, William Mikula. William has closed out 110 profitable trades straight since January 2016… With a win streak like that, it’s no surprise why Teeka says he’d snap William up in a heartbeat if he were still running a hedge fund.
In today’s interview, William breaks down a concept that scares many investors: volatility. As he points out, if you want to consistently beat the markets like hedge funds do, you need to turn volatility from a foe into your friend…
By Nick Rokke, analyst, The Palm Beach Daily
Nick: Thanks for joining us, William. I want to talk to you about a concept many investors don’t understand—volatility. Can you tell readers what it means?
William: In the simplest terms, think of volatility as how much an asset’s price moves.
Let’s say you own a house, for instance…
One year, its appraised value goes up by $25,000. The next year, it’s down by $30,000. And the following year, it shoots up by $50,000. In a scenario like that, you could say your house’s pricing is volatile.
The same applies to the stock market. Volatility can send stocks drastically higher and lower on a dime.
Nick: So why should readers pay attention to volatility?
William: Let’s stick with our real estate example…
Imagine that the house we’re talking about is a beautiful beachfront mansion—a one-of-a-kind property.
But maybe the property is in a country with political instability… or is in the path of some kind of natural disaster, like a hurricane.
Well, that kind of news could temporarily decrease the property’s value—even if nothing about the property itself has changed. Of course, the storm could stay offshore or hit somewhere else. And a politically unstable situation could become more stable.
But here’s the thing… When volatility makes an asset’s true value drop, you can buy it at a cheaper price.
And volatility creates irrational pricing in the stock market at times, too…
For instance, a great company can see its price fall because of a product recall, an earnings miss, or a lawsuit. Or as we saw more recently, trade war fears can affect stocks that sell goods overseas.
Now, we like these scenarios where nothing about the company has changed but its price. Because when the issue blows over, the company will usually rebound.
So by paying attention to volatility, you can swoop in and buy the stock equivalent of that beachfront mansion… at a discount. This is how elite Wall Street hedge firms view—and take advantage of—volatility.
Nick: How do you track volatility?
William: The easiest way to monitor it is through the CBOE Volatility Index, or the VIX for short.
You can type “VIX” into Yahoo Finance or your brokerage account and see what level it’s at with the click of a button.
And if there’s one thing Teeka and I check every day, it’s the VIX. It’s a simple way to test the pulse of the market.
Nick: And what’s considered as high or low levels for volatility?
William: The VIX ranges from 0 to 100. In general, when the VIX is below 20, we consider it to be a low-VIX market. This means investors are calm and complacent.
But a high-VIX market with a reading of 20 or higher tells us that investors are nervous and fearful. When this happens, we’re looking for opportunities to makes gains out of the irrational pricing I mentioned earlier.
Nick: How do you use this irrational pricing to profit?
William: We use our proprietary system to scan the markets for the most elite stocks that are trading at a discount due to volatility.
Then, we do our research… Big T and I discuss it, and if everything stacks up, we strike.
Nick: That’s great, William. Switching gears a bit, what are some of the traps that investors fall into during volatile markets?
William: Well, at the end of the day, we’re all human. So it can be easy to get swept up in the fear and panic that rules the day when volatility strikes.
But you have to condition yourself to think differently—to move forward while others are running away.
I would say the primary mistakes investors make in volatile markets are selling out of good positions too soon… locking in losses… and not taking advantage of the discounts available on the stock market’s “beachfront mansions.”
Nick: So how can investors benefit from volatile markets?
William: Always keep at least 10–15% of your portfolio in cash as dry powder. This will help you stay calm when the markets take a nosedive and volatility spikes.
Then, you should deploy this cash only when the VIX spikes over 20. You might not be buying at the absolute bottom, but you’ll be much better off than if you buy when everyone else is euphoric about their investments.
In fact, this is one of Warren Buffett’s favorite strategies. He keeps tens of dollars in cash on hand to strike when the VIX spikes.
For example, he made over $4.9 billion in cash profits in 2009 when volatility went crazy—all because he was prepared.
And legendary investor Carl Icahn uses a similar strategy, too.
Nick: Where do you see volatility headed for the rest of 2019 and why?
William: I think that volatility is the new normal. Here’s why…
There are countless catalysts on the horizon that could push us back above a level of 20—like trade wars and geopolitics. Often, a spike in volatility is just a scary, negative news headline away.
This might even be hard to believe, but the mainstream media is one of our greatest allies. They create irrational fear on a regular basis to capture viewers. And this causes periodic sell-offs in the stock market… But we use it to our advantage.
So I’d say expect at least three spikes above 20 on the VIX as 2019 plays out.
Nick: And are there any companies on your radar for when volatility does tick up again?
William: Yes. When the VIX hits above 20, pull up Walmart, Pfizer, and FedEx. If their stock prices are lower due to the volatility, I’d scoop up some shares.
They’re undervalued as is, so any sell-offs should be temporary. And when the volatility recedes, these stocks will snap back and head higher.
From there, you could hold long-term and collect dividends and capital gains… or cash out your short-term profits.
Nick: Thanks for your time, William.
William: You’re welcome.
Nick’s Note: Before Teeka began showing people how to make their fortunes in crypto, he was using traditional hedge-fund strategies to help his clients build their wealth. These strategies include some of the best-kept money-making secrets on Wall Street.
And now, Teeka and William have put together a free special report that includes three of their most powerful trading strategies. It’s called “My Top 3 Ways for Making More Money With Less Risk.”
We normally restrict who we share these strategies with—and typically reserve them for paying subscribers. For that reason, we’re limiting the number of people we send this report to, and we’ll be pulling it offline soon.
There’s a revolutionary way to make huge money from gold—even if the price falls. The gains delivered from it over the past year speak for themselves… 169%, 264%, and even 9,001%.
But timing here is key… The next run up could very well start today. Read on here for all the details…