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Plenty of ways to play the downside

Feb 03, 2022

Good morning!

Facebook biffed it as I expected and poof … the markets are getting carried out feet first.

Here’s my playbook.

1 – No, the selling isn’t over

That’s what I told the savvy Stuart Varney this past Monday and volatility will be our constant travelling companion for the foreseeable future. (Watch)

All is not lost, though.

In fact, there are plenty of ways to play the downside

People panic because they’re “long” only – meaning they own stocks. But that means they’re missing 50% of the profit potential because the markets go both up AND down.

Hedge using inverse funds, buy put options if you’re options savvy. Continue to buy stocks you want to hold if you’ve already got ‘em and especially if they’re key dividend payers.

Above all else, use your trailing stops as planned and don’t look back if they’re triggered.

In One Bar Ahead™, for example, we’ve “stopped” out of a few otherwise rock-solid companies recently. That’s no fun but anybody following along as directed now has a) more flexibility to buy when the time comes and b) has more cash on the sidelines if the selling gets worse.

And it could when the Fed raises rates shortly.

2 – Biggest wipeout in market history

Of course, I also said that watching Facebook would be like Fantasy Island but there’s no need to rehash that. (Watch)

More than $200 billion went up in smoke in the overnight markets at one point. It is now the biggest single wipeout in market history.

ETF owners, by the way, better brace themselves because the total wipeout will probably top $1 trillion before the dust settles. The computers will kick in when the markets open (and by the time you read this).

3 – Metaverse ETF launches; guess which company is NOT included



The new Subversive Metaverse ETF from – you got it – Subversive Capital Advisor launches today on the CBOE BZX Exchange. All sorts of great companies providing services and infrastructure will be included save one … Facebook, now Meta. (Read)

I think that speaks volumes about what you want to buy and it ain’t FB!

4 – Dividend stocks are a must-own if you’re into passive income

“But those are like watching paint dry” said a conference attendee to me once.

“True, but you’ll be dang glad you have ‘em when the time comes,” I replied with grin.

Studies show the best dividend stocks … pay through thick and thin, fall less, stabilize first and recover faster.

But don’t take my word for it. Here’s a great primer. (Read)

That’s not such a bad thing, is it?

Didn’t think so.

5 – YouTube has a higher run rate than Netflix

Okay sports fans, here’s the deal. Google bought YouTube for $1.65 billion in 2006 but didn’t start breaking out earnings until 2020. Last quarter YouTube advertisements tallied $8.6 billion. That’s an annual run rate of $34 billion which is $4 billion higher than Netflix’s corresponding tally of “just” $30 billion. (Read)

Remember our credo, buy the best, ignore the rest.

You know what to do.

Bottom Line

There are three things you need to do if you want to win in the markets.

Seriously … that’s it.

Here they are:

  1. Focus to the point where you can explain the stocks you buy to a 5-year-old
  2. Execution is everything. Most people talk about plans. Have a plan and manage risk at all times, not just when the SHTF.
  3. Define victory, work backwards. Vague won't cut it; be specific.

I’ll be with you every step of the way.

You got this – I promise!

As always, MAKE it a great day.




P.S. Time is running out to join the One Bar Ahead™ Family before the February issue drops tomorrow. I'll be sharing two new recommendations, a power trading technique I call "investing with a parachute", and more.
Become a Family Member today

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