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Back in October, JPMorgan Chase & Co. (NYSE: JPM) analysts Eduardo Lecubarri and Nishchay Dayal warned that the $7.4 trillion of global assets parked in passive funds could "exacerbate a rout" during the "next recession."
Well, they were half right: We're not in a recession.
But the escalating sell-off – especially in the highflying, index-leading big-cap stocks – is weighing heavily on passive investors.
"Weighing heavily," as in, passive investors are losing lots of money just about every day.
Active investors and traders, like us, have options. We can hedge, we can get short, trade puts, even go to cash – there are moves we can make.
Passive investors? Well, they could become active in a major way just about any day now. The panic would be legendary.
If that happens – and we are getting close to market levels that could turn passive investors into very active panic-sellers, a crash may not be far off.
The good news is, if you're ready for what could be coming, you stand to make a huge amount of money in a hurry…
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.