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Every week, my inbox is flooded with questions, many of which can be summed up simply as, "Which of these stocks should I buy?"
But, in times like these, I think the more important question to ask is, "Which stocks should I sell?"
Making real money in volatile markets isn't just a matter of buying the right stocks at the right time. To keep your profits, you need to know what stocks to sell and keep off your portfolio. You need to know what toxic stocks could lead you to ruinous losses, even as the crowd around you rallies them higher.
This past week, we got some great examples of what to look for in terms of surefire signs that a particular stock is not going to move much anytime soon, and that any sentiment-based bumps you see are due to fall again shortly.
One such sign is when a company is in the process of changing its business model, and it's not really clear what the new business model is going to be or whether consumers are going to respond to it. There's a big player in the media world riding a slight rally right now that seems tempting, but don't fall for it - in the long run, the stock has nowhere to go.
Another sign is when a stock is making record lows, especially in a market as volatile as this one. I'm as much a fan of making money by "buying the dip" as anyone, but when a company's stock is falling down past its usual floor, it's a good sign that there's no huge rally coming afterward.
I've got two well-known companies in that situation right now, one in entertainment and one in the airline industry. If you've got them in your portfolio, now is the time to take profits.
For these three tickers and one bonus trade, check out this video...
It's more important than ever for investors to find solutions that can help counteract the volatility we've seen this year. As interest rates rise and the market teeters, banks are one area where investors are taking refuge.
But we've identified two other key market sectors where a new flood of buying is going to create opportunities for potentially massive profits, especially in small-cap stocks that often get overlooked by the major players.
I have a strategy to narrow thousands of these stocks down to the few with the biggest potential to be the next market winners.
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.