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We've always believed the biggest profits go to those investors who pay just as much attention to the short-term outlook as they do to the long.
In other words, the folks who can trade as nimbly and quickly (and most of all, correctly) as possible, while not losing sight of where the markets and their wealth will be in the next one, two, or five years.
Fortunately for us, we've got access to some of the best financial minds in the industry who, together, pack what we're confident is the biggest, most diverse moneymaking "toolbox" this side of Wall Street. With research like this, it's just as easy to bag doubles on quick two-point moves in Amazon.com Inc. (NASDAQ: AMZN) as it is to, say, grow our buy-and-hold gains by 10%, 15%, or more every year.
On the one hand, you've got Michael A. Robinson, whose open Nexus-9 Network model portfolio is up nearly 70% on long-term holds alone.
On the other, you've got Tom Gentile, whose "in on Monday, out by Friday" approach to his Weekly Cash Clock model trades has pulled down 27 double- and triple-digit winners in 2020; most of these were closed for profits in one or two days.
And those are just two of our experts.
If those results don't prove the long view is just as important as the short term… well, I don't know what does.
Today, I want to share with everyone the very latest in thinking about our long- and short-term prospects. We'll look at where our biggest, fastest profits will come from, and also what we think makes sense over the next year or more.
To do that, I spoke to two of our experts with different market approaches and different experiences, but who do in fact share one goal: making you money.
Be Long on the Markets in the Long Run
Shah Gilani is our Chief Investment Strategist and a Wall Street pro since the 1980s, when he started his own hedge fund and owned his own seat on the Chicago Board Options Exchange; he did some important work there on what would later become the "infamous" VIX, which is to this day one of the most widely used market barometers.
In addition to overseeing the Money Map Report model portfolio (currently heading into its 14th market-crushing year with 24 double- and triple-digit long-term stock and ETF winners), Shah writes the 10x Trader and Straight Line Profits trading research services.
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When I wanted to know about the long-term moneymaking arc of the stock market, Shah was the first to come to mind. This interview has been edited for clarity.
Greg Madison: You've been one of the most consistently bullish guys out there, to the point where three years ago, you went on national television and predicted the market would double in five years. And despite everything that's happened since, the market's on pace to do just that. Has the bullish case changed at all – for the weaker or the stronger – between then and now? Why do you think that is?
Shah Gilani: Greg, the bullish case hasn't changed. Sell-offs, corrections, and panics happen, and they're often necessary and even healthy, but the basic equation hasn't changed.
In fact, it's as basic as it gets: There's more capital being "manufactured" every day, from a huge variety of "generators" – wages, profits, money-printing, crypto creation, initial public offerings (IPOs), and special-purpose acquisition companies (SPACs). I mean, there's leverage, too – it just goes on and on. And so all of that capital – every nickel – is chasing fewer and fewer shares.
GM: From buybacks, you mean?
SG: Yeah, there are fewer shares available because of trillions of dollars' worth of buybacks. In 2018 alone, I think the figure was something like $1 trillion. But there are also mergers and acquisitions, companies being taken private, shares being parked at sovereign wealth funds and at central banks – yes, I said central banks. And we're not seeing so many new issues these days that could add to that diminishing pool. When I said "basic," I really meant it; it's like Economics 101: More money chasing fewer shares equals rising prices.
And now you've got powerful dynamics, like TINA-
GM: "There is no alternative."
SG: Exactly – and we've got pension funds not able to meet obligations increasingly fishing for returns in equities, I could go on. But, when you see what I see, you come to the same mathematical conclusion I reached: This market's goin' up. Of course we'll double. And once we do that, we'll double again.
GM: But with all that said, it hasn't quite been a straight line up, has it? The post-"COVID Crash" run-up, from the March low to the September peak topped 60%, but even there we saw the bulls take a vacation a few times. But each time, we've seen a sell-off – even down to classic "correction levels" – but then stocks consolidate and gather the strength they need to power back up…
What I mean is, do you think there's a chance we'll see a prolonged slump of any kind?
SG: We could see a prolonged sell-off, but it's just not all that likely given the amount of money at the ready to buy into stocks at lower prices. That's the headline story. The not-so-headline story is, of course, the Fed.
GM: I knew they'd come into it…
SG: Absolutely. Any meaningful, or should I say, serious market panic – and I mean the kind of moment where investors would be weighing either existential or systemic reasons to sell, meaning they're expecting nigh catastrophic losses – would be met in a New York minute by the full force of the Fed; the unlimited application of liquidity and solvency solutions. That alone would basically be grounds for buying back in, which would halt the panic.
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But, then again, there are existential and systemic "bombs" that could blow the markets up. One of them is the Fed itself. The magic of central banking is the magic of fiat currencies and fractional reserve systems. It's all based on faith, as in, "the full faith and credit of the United States." How many other sovereign debt issuers backed their bonds with "full faith and credit" and defaulted?
SG: Faith in the Federal Reserve is basically no different. If that falters (and there are a couple of ways it could falter) or if it fails, we'd get one of those prolonged corrections you asked about – only it'd be a crash, not a correction.
GM: So in other words, a secular downturn is possible, but not probable – short, sharp dips are somewhat more likely. What do you recommend folks do when the bulls do take those breaks, be it for a few days or weeks? How can they protect themselves and stay in the right mindset, ready to pivot to a bullish stance once the bulls start running again?
SG: Buy the dips. Seriously, buy the dips. The way to stay in the right mindset is simpler than most investors would ever imagine: You don't buy "all in" on the dip you face, you apply maybe 20%-25% of the capital you're going to allocate to each new position or average down on existing positions. If there's a leg lower, you buy into that next lower leg with another 20%-25%, and so on. Your mindset will be excited about buying in lower, averaging down to get into positions as close to the lows as you can get. You'll be in, you'll be ready for the bounce, and you'll ride that bounce back higher, whether it happens in a week or a month. And, hey – if there aren't more legs lower, at least you're in somewhere and can add in on the way up. As much as I like buying stocks on the way down, I love buying stocks that only go up.
GM: Thanks so much for your time, Shah – we'll talk soon!
Free Up Some Capital to Be Flexible in the Short Term
Trader Andrew Keene's coming from a different direction, entirely. Around here, we call him the "Millennial Millionaire"; he's younger than I am. But he's one of the best, most successful short-term traders we've ever seen.
His story is extremely compelling, too. Like Shah, he started on the floor of the Chicago Board Options Exchange – as a clerk. Within nine months, he was promoted to floor trader… and market mover.
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But, like a lot of folks, computers began to replace flesh-and-blood floor traders. Andrew had his share of strikeouts, too, to the extent that he actually moved back in with his parents.
In the search for a "reset button," Andrew found himself at a Buddhist monastery in Thailand, where he had the time and headspace to really grapple with the true forces moving the markets. He returned to the States with a new mindset, a plan – and an algorithm hecreated. His first year back, he'd made $1.5 million… then $3.4 million… By the time he hit 30, he'd amassed a $5 million stake.
Andrew wanted to give back, so he began to show other investors how to transform their lives as well, using his proprietary S.C.A.N. algorithm. That's why he created The 1450 Club, where people get the chance to trade in real time right alongside him. In his Super Optionsand Project 303 services, regular people get a shot at exceptional windfalls.
When I considered the short-term prospects of the market, Andrew was top of mind. Once again, this interview has been edited for clarity and to add tickers.
Greg Madison: Thanks for talking to us, Andrew. Let's get right down to it: Where do you see this market going in the next few days, weeks, and months?
Andrew Keene: You bet, Greg. Frankly, when I weigh the coronavirus – all the fallout for the economy – and the polarization and the chance for political chaos like we haven't seen before… I've gotta say I see more downside than upside at the moment. I think, for the rest of the year, the market's capped at 10% upside, whereas a move 20% lower would not shock me at this point.
GM: A lot of investors would hear that and get scared, I think. What should they do about it?
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AK: Well, there's no reason to be scared. The main thing for traders is volatility – it's responsible for all the profits, basically. But even for investors, it's not necessarily anything to worry about. If you're going to buy and hold, buy quality stocks that can leverage the massive changes we've seen lately. Tech stocks, of course; tech's helped us keep the lights on, after all, but also the so-called "stay at home" stocks, like Zoom Video Communications Inc. (NASDAQ: ZM), or Amazon.com Inc. (NASDAQ: AMZN), or even Papa John's International Inc. (NASDAQ: PZZA). Protect those with stops, or even "zero-cost collars" – I'll get to those in a sec. Hedge your portfolio with options on index ETFs; you can actually make more money trading downturns while you keep your long-term holdings locked down. You can speculate with trades on leveraged inverse ETFs, too, as long as you don't pour too much capital in.
GM: So… are you a bear or a bull or what?
AK: If you had to put a label on it, I'm very bearish in the short term, but very bullish in the long term. Take the election – if Trump loses, the markets could sink into fear over the prospect of higher taxes, which would then be an opportunity to trade puts on stocks – heavily. Stocks could go down left and right.
But on the other hand, if Biden wins, we'll see that short-term shock, but in the long term, some policies could be very good for profits; we could see an infrastructure bill, or more capital flowing into green energy.
So there are good reasons to be bearish for now, bullish for later.
GM: As a day trader – and a hell of a good one – what protective strategies do you like right now?
AK: Thanks! If you're long stock, you've got to put on "zero-cost collars." That means buying puts against a stock position and selling calls on the same position so they zero each other out; they pay off if the stock goes up or down. You're not gonna rake in fistfuls of money doing this, but you are going to protect your holdings; you'll live to fight another day, you know?
GM: Andrew, very illuminating. Thanks so much for your time! Catch you soon.
AK: You got it. Thanks for having me.
BUY THIS, NOT THAT: The Best (and Worst) Stocks in America
Shah Gilani is going live in his first-ever segment of BUY THIS, NOT THAT.
In 30 minutes or less, he'll going to run through all 50+ stocks you should know about – for better or for worse.
Shah is not holding back; prices, tickers, and company names will be coming your way fast.
Be ready to take notes! Watch now…