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We're on our seventh week in a row of seeing the markets tumble across the board.
The S&P 500, Dow, and Nasdaq have entered steep declines with little sign of slowing as the Fed plans to raise rates another 50 basis points in June. And, frankly, it's going to get uglier before it gets better.
It looks like complete chaos out there. But it's not.
See, here's the thing: what's happening right now is exactly what the Federal Reserve wants to happen. They want the velocity of money in the economy to slow down, to make financing harder, so that there's less demand on the money supply so that inflation will ease. The downturn in the stock market is part of a system that's working as intended.
I know that's small comfort for anyone watching their portfolio drop like a rock. But as always, there are still opportunities out there if you're willing to take them.
In the short term, there's only one way out of this mess: you need to sell off positions that aren't working and use that reclaimed capital to set yourself up for success in the eventual bounce.
That means ditching all your speculative positions and "growth" stocks that were big profit machines when borrowing money was easy. Right now, those stocks are dead weight and will drag you down faster than you can blink.
The positions you want to get into now are with solid companies that have solid, "fortress" balance sheets - high profit margins, strong revenues, good cash flow, and low debt. You could still lose a bit on these because no one can predict where the bottom is. But those companies are the ones that will bounce back to their previous highs the quickest.
In this video, I lay out exactly what to look for when you're rebalancing your portfolio, along with six examples of stocks that have been hit hardest, and what to do with them...
With the stock market in such a precarious state, investors are going to need some out-of-the-box thinking to find good alternatives 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.
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.