The biggest storm in history?...
The biggest storm in history?... Doc marks the bottom... The most important thing to remember today...
Today's Digest will be brief...
As you may have heard, our Baltimore headquarters is directly in the "crosshairs" of Winter Storm Jonas. The classic "nor'easter" is expected to arrive this afternoon and dump more than two feet of snow on us over the next 48 hours.
Longtime subscribers may remember the "Snowmageddon" storm that covered our office with nearly 27 inches of snow in February 2010. The latest reports suggest this weekend's storm could be even bigger... perhaps the biggest storm in the region's history.
Wish us luck... and if you live in the area, please stay safe.
The timing couldn't have been better...
This past Wednesday, Retirement Trader editor Dr. David "Doc" Eifrig hosted his free educational webinar for thousands of our readers. Doc was there to teach folks how his safe options-selling strategies work, but he also shared his current views on the market.
As we've mentioned, Doc isn't as bearish as Porter is today. That night, he told folks this was just a normal market correction. Rather than panicking, he suggested taking advantage of the volatility. He said opportunities like this are rare, and they often don't last long.
Now just two days later, it appears Wednesday may have marked the bottom – at least in the short term – of the declines.
Yesterday, markets around the world rallied. As we write today, the rally is continuing... Here in the U.S., the benchmark S&P 500 Index is on pace for its first positive Friday close since early December.
The financial media is pointing to news out of Europe and Japan, as well as a rebound in oil prices, as reasons behind the reversal.
Yesterday, European Central Bank ("ECB") president Mario Draghi hinted that the bank may increase its quantitative easing program. He was joined by Bank of Japan Governor Haruhiko Kuroda, who said his bank would also make "policy adjustments without hesitation" if necessary.
In addition, crude oil has rocketed higher... After hitting new 12-year lows on Wednesday, crude has rallied an incredible 20%-plus in the past two days. West Texas Intermediate ("WTI") crude oil – the domestic benchmark – is now trading for more than $31 per barrel.
We'll take a closer look at what's going on in the energy markets next week, but we should note that oil prices are still down more than 30% from their October highs, and more than 65% since late June 2014.
Much of what passes for financial "news" is little more than noise... and many of the reasons attributed to the market's moves should be taken with a grain of salt.
But we do note that markets became extremely "oversold" this week. In addition, several measures of investor sentiment have fallen to bearish levels not seen since the financial crisis.
So while we can't say if this is the bottom of the decline – or merely a reprieve in the midst of a larger decline – we wouldn't be surprised to see this rally continue for a while longer.
As we often remind readers, no one can consistently predict where the market is going next.
Ultimately, Doc could be right... This could be just another normal correction in an ongoing bull market. The market could head even higher before we experience a true bear market.
Or we could be in the early stages of the crisis Porter has been predicting.
Regardless of your stance on the market, it's a mistake to put too much weight on the market's short-term moves.
Even if Doc is right and the bull market continues, this correction could have farther to run. Stocks could fall again.
And even if Porter is correct and a bear market is starting, stocks don't fall in a straight line. Bear markets are known for sharp, vicious rallies that relieve oversold conditions (like we see today) and "fake out" investors before heading lower again.
Instead, we suggest you prepare your portfolio for either outcome. The most successful investors always do.
In addition to your normal risk-management strategies – like proper position sizing and trailing stop losses – this means holding plenty of cash (and gold) and "hedging" your portfolio appropriately.
It also means staying long high-quality stocks and being willing to buy them when fearful investors have sold and driven down their prices.
Remember, the biggest profits are made during times of volatility and fear.
And as we've discussed, there's no better way to take advantage of volatility and fear than to use the strategies Doc teaches in his Retirement Trader service. Even if you don't agree with his bullish thesis, learning and understanding these strategies is incredibly valuable today.
To learn more – and see a live, step-by-step demonstration of these strategies in action – click here.
New 52-week highs (as of 1/21/16): short position in BOK Financial (BOKF), short position in Cullen/Frost Bankers (CFR), and short position in Zions Bancorporation (ZION).
More praise for Doc in the mailbag. What's on your mind? Help keep us entertained during the storm by sending us a note here: feedback@stansberryresearch.com.
"I've been an Alliance member when I started trading in 2005. It has been a good run, particularly with Doc and Steve. Congratulations on your success and hope it continues for decades to come." – Paid-up subscriber Bob K.
"Today's editorial [about Doc's strategies] was absolutely priceless." – Paid-up subscriber John Silverman
"You also forgot to mention one thing Doc kept stressing over and over: Only sell puts on stocks you want to own! So assuming due diligence has been done, this also lowers your risk.
"One other thing: There is very good chance that the stock Doc recommended pays a dividend, because we l-o-o-o-v-e those dividend paying stocks, don't we? Collecting a dividend (or more than one) also lowers the risk because it helps offset any losses." – Paid-up subscriber Rob T.
Regards,
Justin Brill
Baltimore, Maryland
January 22, 2016
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