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Volatility is front and center again after U.S. President Donald Trump said he would impose new steel and aluminum tariffs, the first shot in what looks like an all-out global trade war on the horizon.
Now, I've spent more than two decades in the markets. I primarily stick to investing these days and use techniques similar to those of leading private equity funds to find unreasonably priced bargain securities that stand the best chance of making me a pile of money.
But I'm no stranger to trading. Most of my trades are related to arbitrage, but they've also occasionally forayed into options and futures.
More importantly, my drinking and dining companions in New York and Chicago include some outrageously successful traders. In Chicago, these are mostly option traders.
Most of them share two common traits: an unnatural ability to consume expensive booze, and the tendency to forget more math before breakfast than most of us will ever learn.
All of them understand volatility in their trading. And unlike most retail investors and traders out there, they actually know how to use it.
The tragedy is, if you're a regular investor, even one that's doing your own trading, you don't have to come within 50 miles of the VIX to make money when things get shaky. Here's what I mean…
About the Author
Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of "Max Wealth" and Heatseekers.