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There's an old Wall Street adage: "Buy the rumor, sell the news."
This is another one of those sentiment-related features of the market I've been telling you about lately. A lot of investors and traders pounce on headlines that speculate on what might happen, do some trades, and push the value of a particular asset up or down for a short time.
Then the actual outcome hits, and nine times out of ten, it doesn't represent too much of a change in the status quo. So there's another flurry of trades, and the asset goes back to where it was. These kinds of changes can happen within days of one another, and they're only getting faster as the "five-second news cycle" continues to dominate.
This past week we had some great examples of this phenomenon, and it provides us with the opportunity to either take profits or change course before taking a huge hit on a stock that's just not going to perform the way the media thought it would.
The three picks I have for you have been in the news lately, pushed along by the momentum of some big stories.
One of them is a proposed buyout for a major media company that's fizzling. The second is a travel industry company riding on rumors that the pandemic is easing once and for all. And the third is a finance industry stock that didn't quite meet expectations on its last earnings report.
Check out this video for the tickers and my explanation for why you should sell all of these now...
In the short term, it's possible to make these sentiment-based trades work in your favor, but it can be hard to find consistent returns, especially with the volatility we're seeing. Investors are going to need some out-of-the-box thinking to find good places to park their cash for the long haul.
Fortunately, in times like these, there's one thing you can always count on - the American entrepreneurial spirit. Right now, the next business visionary, in the same vein as Jobs, Musk, or Gates, is hard at work trying to make their dream a reality.
But they'll need help to do it, from angel investors with the guts to back a good thing.
Most people don't realize how lucrative startup investing can be - potentially up to 1650X better than stocks. And we've got one in our sights that is expected to pull in skyrocketing revenue over the next year, from $11 million to over $154 million.
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.