That’s certainly what the talking heads on TV want you to believe.
Their networks are in the business of keeping ratings high. And fear keeps viewers glued to their screens.
Of course, there is some truth to this claim…
If you’re a buy-and-hold investor, you’re going to take a temporary hit to your wealth in times like these.
Since the start of last year, the S&P 500 is down 16%
The tech-heavy Nasdaq is down 31% since it reached an all-time high in November 2021. And giant tech stocks such as Amazon and Netflix have been cut in half.
The word “brutal” has been overused. But it sums up the experience well.
We’re living through the worst market for investors since the economy melted down in 2008.
But as I’ll show you today, that doesn’t mean you have to give up on your dream of financial independence.
If you know how to take advantage of them, bear markets also present opportunities to grow your wealth.
He’s been a professional trader for more than three decades.
He used to manage money for celebrities, entrepreneurs, and Silicon Valley moguls. Now, he helps everyday investors make money trading at his Jeff Clark Trader advisory business.
And he’s been a regular in these pages since we created The Daily Cut as a premium e-letter for all Legacy Research subscribers nearly five years ago.
You’ll often hear me call Jeff our “bear market guru.”
He probably wouldn’t like the guru part. He’s too down to earth for that. But Jeff has notched some of his biggest wins in times like these.
For instance, he managed to 10x his money during the lead-up to the Black Monday crash of October 1987.
And in 2001, after the dot-com bubble burst, his trades netted him and the clients at his brokerage firm a seven-figure windfall.
That’s why I hope you’ll tune in to Jeff’s webinar on Wednesday. He’ll be revealing a new strategy he’s created to do the same in today’s bear market.
And he’ll be issuing a detailed warning about a 44-day window of extreme stock market volatility he says lies ahead. (Sign up for free with one click here.)
I’ll have more details for you on that below. Plus, I’ll share with you the three rules Jeff follows to manage his risk.
First, let’s take a closer look at Jeff’s performance the last time stocks got hit this hard…
The U.S. housing market crashed nationwide for the first time since the Great Depression.
This caused the collapse of the two most storied Wall Street investment banks, Bear Stearns and Lehman Brothers.
Roughly 2.6 million Americans lost their jobs.
And the stock market got crushed.
Peak to trough, the S&P 500 plunged 57%. Most folks yanked their money out as fast as they could.
But not Jeff… His experiences in 1987 and 2001 told him he could make a lot of money during market panics. And that’s what he set out to do…
At the time, he headed up a trading advisory called the S&A Short Report with our colleagues at Stansberry Research. And instead of panicking along with the crowd, Jeff put his experience to work to help his readers profit.
As the worst of the crisis raged… and fears mounted that the world was facing another Great Depression… Jeff gave his subscribers the chance to make transformative wealth.
Newsletter industry legend Porter Stansberry was Jeff’s publisher at the time. Here’s what Porter wrote on January 29, 2009…
Jeff’s trading this year in The S&A Short Report was nothing short of heroic. He made 52 recommendations – all of them short-term trades. Out of these, 42 made money. A win rate of more than 80% in options trading is ridiculous. The average return on every trade was a bit more than 31%.
That’s outrageous when you understand the short duration of these trades and the turnover in the portfolio. How outrageous? The cumulative total return was greater than 1,700%.
In 2020, during the Covid crash, readers who followed his trading recommendations had the chance to double their money at least 18 times.
And while most people lost their shirts last year, Jeff gave his readers the chance to profit at least 50 different times – with gains of 142%… 156%… 173%… even 333%.
I’ve known him for years. And contrary to the popular idea of traders as big risk takers, he’s a very conservative guy.
He’s built his trading advisory business on strategies that help him earn outsized gains without taking on outsized risks.
And he does that based on three simple rules…
Rule No. 1 – Trade with only 10% of your capital
Jeff recommends trading with no more than one-tenth of your investable wealth. You want the other 90% diversified across cash, bonds, buy-and-hold stocks, etc.
This is a vitally important guardrail you must have in place before you start trading.
Rule No. 2 – Look for asymmetric trades
Prudent speculating means making trades only when the potential reward far outweighs the potential risk. These are what we call asymmetric trades here at Legacy.
The buy-and-hold investor puts $100 risk for the chance at making a $10 gain. An asymmetric trade allows you to put just $10 at risk for the chance of a $100 gain.
You can afford to have more losers as an asymmetric trader, because the size of your winners makes up for them.
Rule No. 3 – Never overleverage a trade
Jeff recommends his readers limit the amount they put at risk on each trade.
A good rule of thumb is to put no more than 1% of your account into any one trade.
If the trade goes against you, you’ll live to fight another day. And if it goes your way, you could earn triple-digit profits in a short time.
If you’re not prepared, they’re extremely challenging.
But as Jeff has shown over his career, they can be surprisingly profitable for folks who know how to trade them.
So, if you’re already a Jeff subscriber, make sure to pay special attention to his recommendations over the coming weeks. Now is a great time to be a trader because we’re seeing such big moves in stocks.
And if you’re not already following him, tune in to his webinar this Wednesday, January 25, at 8 p.m. ET.
I won’t steal Jeff’s thunder. But it has to do with an event triggered by a federal law that happens every year around this time.
And it he says it will send hundreds of stocks crashing over the next 44 days.
They could crash 20%, 30%, or even 50% in a single day.
So, it will be chaos for unsuspecting folks blindly holding on to these stocks.
As he’ll be talking about in more detail on Wednesday, Jeff has developed a strategy for trading this window of heightened stock market volatility.
It’s based on a proprietary “calendar” that lets us know when these events are set to occur.
This allows you to capture short-term moves without sticking around for catastrophic losses.
During testing, he found there was an opportunity nearly every day to double your money. The average gain was 162%. Some were as high as 500% in just 24 hours.
Normally, it takes years to see those kinds of gains. But with Jeff’s strategy, it can happen in just days.
So if you haven’t already, go here now to automatically reserve your spot.
Editor, The Daily Cut