In a World Gone Mad, Try Doing This Instead

The answer to election uncertainty... A way to 'election proof' your portfolio – and win in the long term... In a world gone mad, try doing this instead... Be the 'second investor'... A once-in-a-decade opportunity... A Stansberry Conference classic...

We won't waste any time rehashing last night's 'debate'...

Instead, we'll dive right into the investment idea that came from it.

As we wrote just a week ago, pundits love to talk about whether stock markets do better under the leadership of Democrats or Republicans, but it largely doesn't matter. In the September 23 Digest, we noted...

There's no clear-cut evidence to say that "If a Democrat wins, this happens," or, "If a Republican wins, this happens."

We also shared statistics that show, if anything, stock market performance ahead of the election tends to predict the result... not the other way around.

Our colleague Dr. David "Doc" Eifrig picked up on this theme in the latest issue of his Retirement Trader newsletter, published last Friday. He shared more details, as well as his favorite chart on the point...

Depending on how you count or how far back you look, you get different answers. Not to mention, presidents inherit an economy from their predecessor... Shouldn't you adjust for that? By how much?

Here's our favorite stat... Since 1926, Republicans have held the House, Senate, and presidency for 13 years. In those years, the market returned an average of 14.52% per year. There have also been 34 years of unified Democratic government. In those years, the market returned an average of... 14.52%.

A presidential election result is just part of the complexity of the market...

As Doc continued in his Retirement Trader issue...

The machinations of the Federal Reserve, the economy, and the thousands of businesses and millions of individuals wash out most of the effects a president can have on the stock market.

He urged his subscribers to "focus on those, rather than a single election. Sometimes something like a big tax cut can boost stocks, but that's a rarity."

Ah, some clear-headed wisdom... It's refreshing to read.

Yet we don't blame anyone for feeling like this presidential election is more important than all the others...

As we saw in the first presidential debate between incumbent Donald Trump and challenger Joe Biden last night, there is no shortage of material to cover on this point.

We don't know who will win – or if the result will be contested or not – but we do know some of the potential outcomes...

As far as the economy and markets go, if the White House and Congress were to become "all blue" in November, the push for socialist policies and our national debt will increase to even higher levels...

At the same time, the Federal Reserve and Congress' intervention in the economy is already at all-time highs. Our debt has grown – again – and it might grow some more...

Yesterday and today, U.S. Treasury Secretary Steve Mnuchin and Democratic Speaker of the House Nancy Pelosi both said they were "hopeful" for more free money. But Wall Street isn't buying it, as Stansberry NewsWire editor C. Scott Garliss wrote earlier today.

As longtime subscribers know, for more than a decade, our founder Porter Stansberry essentially predicted the reckless government behavior – and accompanying social unrest – that we're seeing play out today... and what it means for your money and investments.

More important, Porter has shared how best to protect your portfolio in the long term from the inevitable fallout... He has recommended buying high-quality companies that will fare well no matter what, and other smart investments that will help you fight the government's dollar-devaluing monetary and fiscal policies.

Today, we want to share another idea that can 'election proof' your portfolio in the short term...

When the world goes mad, this strategy is a "win-win."

It can add protection and boost your portfolio as soon as you are able to execute the trade. And trades like these, if you know what you're doing and if you commit to it, have proven to be consistent winners for investors over the long term, too.

This pitch comes from Doc, who detailed the compelling reasons to use this strategy in his Retirement Trader issue last Friday. The idea is to sell portfolio protection to fearful investors to boost your own portfolio and lower risk at the same time..

That might sound counterintuitive or confusing... But with Doc's guidance, it's a simple, easy-to-follow strategy that has made thousands of subscribers happy for the past decade.

And today, we'll outline why this selling strategy is perfect for the environment we're seeing...

Wall Street is buying portfolio protection...

In short, a lot of Wall Street traders looking ahead to November are betting on wild volatility in the markets as a result of whatever happens with the election... And they're doing it at a level not seen in the past four presidential election cycles, dating back to 2004.

Regular Digest readers know we often talk about the CBOE Volatility Index ("VIX"). We sometimes call it Wall Street's "fear gauge"... and this situation is exactly why.

The VIX measures the expected volatility in the S&P 500 Index over the next 30 days by looking at the prices people are willing to pay on call and put options for a wide range of stocks. When they're worried and expecting more volatility, the index rises as the prices of these options rise.

Today the VIX checks in at 25 – well above average, and higher than its peak before the 2016 election. Plus, Doc is looking beyond that headline number... at another trend in VIX bets that has alerted him and his research team to an "election protection" opportunity. As Doc wrote in Retirement Trader...

You can also look at the VIX levels for different months by looking at futures prices. Most of the time, months move in tandem. The overall market may be volatile or not. The VIX can rise or fall – but the expectations for, say, September and October don't differ much from each other.

Those VIX prices can indicate when the market is prepping for something particularly wild. Right now, it is... And that thing is the election.

Here's the difference between the two-month and the one-month VIX...

(The spread has dipped in the most recent reading as the market has fallen and the current month's volatility has risen.)

But prior to that, investors were saying, "Sure, things are quiet now, but they won't be once the election comes. I'll pay a lot more for protection from that."

Even if we could tell you for sure whether Trump or Biden will emerge as the next president, we couldn't tell you precisely which way the stock market will react in the immediate aftermath.

Anyone selling you that argument isn't giving you the full picture.

But we do know that the "fear" present in today's market gives individual investors a great opportunity to not only protect their portfolios, but make money on the high-quality companies we love at the same time.

There are at least two ways to look at this 'fear' game...

You can go with the "herd" and pay up for the protection yourself. By doing that, you'll become part of the group of bearish betters that drives the VIX higher.

These are folks who work at pension funds or investment firms trying to make their quarterly numbers... or they're Robinhood traders acting on a hot Reddit tip. For the folks working as fund managers, it could make a little sense to buy "portfolio insurance" against the various post-election scenarios...

Or you could be what Doc calls the "second investor." By that, he's talking about the person who sells this protection to fearful investors. That may sound like you need to work on Wall Street, but you don't.

This is a strategy available to any individual investor willing to learn about it. I'm talking about selling put options. Most people, if they think about options, think about buying them. Fewer people think about selling them – and this is where the opportunity lies.

Now, we should mention here that you need a good chunk of capital to get started with this strategy, and it's not for everyone. We urge you to first get your financial house in order with the basics before pursuing this strategy further.

But if you have your bases covered with a well-diversified portfolio... and are open to learning about how to add extra income to your portfolio while reducing risk and profiting from others' fears... you won't find many better guides on this strategy than Doc and his research team.

And there's no better time to give it a try than right now.

These periods of heightened volatility come around about once a decade...

Much like the start or end of bull markets. Pick a sector and you can find an example... like housing or retail.

Fearful investors are paying nearly 200% more for protection on retail giant Target (TGT) – which has been one of the pandemic winners, as we've written recently – than they were back in July 2019.

If you don't already subscribe to Doc's Retirement Trader service, it will be well worth your time to learn more here in his new presentation. Or if you have access already and haven't checked out Doc's work in a while, click here to read his latest issue.

As Doc shared in the July 10 edition of Dr. Steve's Sjuggerud's free DailyWealth e-letter...

The truth is, this strategy is one of the most misunderstood and misused financial vehicles on Earth. The popular press – and even your broker – will tell you it's guaranteed to lead to financial ruin. But that's just not true... if you understand how to trade them.

The way most people use this strategy increases the risk to their capital. Most options advocates like to tout buying options, rather than selling options. When that's the focus of your trading, it's a lot easier to pile up frequent losses and fewer gains.

But my technique is meant to decrease the risk to our capital.

Done safely, selling something called a "put" option is a fantastic way to earn income.

Here's just a peek at the details...

When you sell a put option, you're agreeing to buy a stock below the market price within a set time. You get paid for making that agreement. If the stock never drops below that price, you get to keep the cash – free and clear.

And if the stock does drop below that price, the cash ensures that you get a discount to that price. It's like getting paid to buy stocks at a discount. But as Doc says...

Here's the real beauty of this strategy: When you sell options, you don't have to be exactly right about how or when a stock will move up in price. Many factors work in your favor. So even if the shares stagnate, you still profit.

In other words, you don't have to be right about an election result or anything else... or even be fearful of what's going to happen in the market yourself. The point is, we know others are fearful... and this knowledge is a great way to not only protect your own portfolio, but boost it.

Doc's "winning percentage" over the past decade in Retirement Trader is 93%... And last year, he handed some folks the opportunity to make more than $30,000 in extra cash. And with the heightened fear in the market today, the yearly returns that subscribers see in the coming months could absolutely blow past that amount... regardless of what happens with the election.

The more things get volatile and the more investors are uncertain about the economy or the direction of the stock market, the more cash Doc's recommended trades can bring in for individual investors like us.

A Conference Classic

At our Stansberry Conference last year in Las Vegas, economist and New York University professor Nouriel Roubini made what, today, looks like a few prophetic statements...

In the next recession, Roubini told our conference attendees, there will be even more "unconventional policy" from institutions. In fact, he said we may see "helicopter money" – where central banks will print money and hand it to citizens...

You can listen and watch for yourself here in a full replay of his presentation...

While Roubini's comments sure sound spot-on today, the point is that he made them a year ago... Those who listened back then were fortunate.

Roubini expected the unprecedented measures from the Federal Reserve and other central banks around the world that we've seen in response to the COVID-19 pandemic, and he explained what that meant for our economy and stock market.

This is the sort of ahead-of-the-curve thinking and advice we aim to bring to all of our subscribers every day, including at our annual Stansberry Conference.

This year, our lineup of speakers includes bestselling author Michael Lewis, former Fox News host Trish Regan, and more than a dozen other special guests, in addition to our crew of editors and analysts.

And it's never been easier to attend our event... The conference will be fully virtual, meaning you don't need to travel anywhere and can watch our experts from the comfort of your own home – or wherever you want. The event starts this coming Monday, October 5.

If you haven't grabbed your ticket already or are interested in learning more, click here for more information. Everyone who registers today can get a special gift worth $799.

New 52-week highs (as of 9/29/20): Novo Nordisk (NVO).

In today's mailbag, feedback on yesterday's Digest by Kim Iskyan, kudos for Dan Ferris, and a thank you for a subscriber's funny comment in yesterday's mailbag. Do you have a comment or question? Let us know what's on your mind at feedback@stansberryresearch.com.

"Your description of President Erdogan in today's Digest and what he's done to Turkey sounds so much like our own President Trump and what he's doing to America, it's not even funny. Not everything is precisely the same, but almost." – Paid-up subscriber Al V.

"Hi Dan, I am an Alliance member and grateful for your work. Thanks for what you do.

"I've enjoyed seeing your writing and communication style become a bit more edgy. In a very good way. In a more real, raw, purposeful and pure kind of way. I wonder all your experiences and thoughts that have molded your art into that communication style.

"Thanks for allowing yourself to go there. It's a beautiful thing, especially in this stuffy investment world.

"I share your interest as a student of life.

"I'm a Navy and airline pilot, at least before I get furloughed in a few months, would be fun to grab some vino with you sometime when I get out your way. I'm sure hanging with subscribers isn't something you probably like doing, after a long day's work.

"Anyways, wanted to just say thanks for your art!" – Stansberry Alliance member Steve B.

"Just wanted to thank the subscriber who sent in the comment:

After most of my interactions with flesh and blood over the past 15-20 years, I'm left to wonder if I'm that impressed with AI or rather our standards as Humans have been lowered even more than I had imagined. – Paid-up subscriber Tim H.

"That was the best belly laugh I've had in a long time, and I needed it!" – Paid-up subscriber John W.

All the best,

Corey McLaughlin
Baltimore, Maryland
September 30, 2020