Living Free as the Markets Die

The markets shouldn’t be the most stressful part of your day.

If you wake up each morning and your mood is determined by how the Dow Jones Industrial Average, Nasdaq, or S&P 500 are moving, you’re doing something wrong.

It’s that simple.

You’re overleveraged… you’re underleveraged… you’re holding too much in risky assets… you’re not diversified… There’s a laundry list of mistakes you could be making.

Investing is about building for the future.

About financial independence.

It’s about the freedom to live the life you want.

And one of the easiest ways to accomplish this is by recognizing there’s a method to the market’s madness… even when it comes to its fear gauge.

Waves Beyond Goodbye

All assets move in waves.

Even those that are intangible.

Corn, crude, gold, and platinum you can hold and consume (though three of those four would give you a stomachache… and I don’t like corn).

Buying shares in a company allows you to own a fractional piece of an enterprise. One that spans the globe and sells products to customers.

Volatility on the other hand is the speed of change in share prices.

Yet, we can trade volatility. We can buy and sell it… Go long or short...

But here’s what most investors will never realize – though it should be your No. 1 takeaway from this essay today: Volatility moves waves.

Not just intraday. Not from candle to candle or week to week. But throughout the entire year.

And these waves strike against the shore in the same pattern over and over again.

Savvy investors can exploit this for gains, or merely to keep themselves sane…

Fear’s 42% Summertime Surge

At the end of May, when the CBOE Volatility Index (VIX) was trading above 20, I made a bold claim...

I laid out that by the time July rolled around, the market's fear gauge would tumble to 12.

A decline of 40%.

But then we'd see it surge from there to the start of November.

Well, this unfolded to the “T.” As Americans were gearing up for the Fourth of July holiday week, the market’s fear gauge fell to its lowest level in a year… 12.73.

That was a drop of 40.3% from its peak in May.

At the time, equities were flying high. In fact, the Nasdaq closed out the first six months of the year with its best performance since 1983.

But those low volatility days of June and July are in the rearview. And unease is back, with the VIX chugging higher.

Well, here’s a news flash for you… that’s precisely the pattern we witness every year from volatility. It trades in a predictable wave…

As tech stocks have lost some of their shine in August, the VIX is roaring back to life. It’s already up 35% in under three weeks!

But here’s the deal… that’s August.

Historically, it’s the strongest month for VIX gains.

Over the last 15 years, the market’s fear gauge has closed August higher than where it began 11 times. And almost half of those were gains of 23% or more (four of them more than 30%).

So, this year is not a fluke. This year is not a disaster. This year is far from anything but the norm.

This year is part of a long-term, established trend I warned you to prepare for.

And the thing is, if you recognize and position yourself for trends like these, while the rest of Wall Street is scratching their heads or getting bummed out by portfolio balances, you’re living carefree…

Living the Good Life Buying Low

I only want to buy assets at their lows – not their peaks.

And I only want to enter a position right before its wave moves higher.

This is how you score consistent gains.

Most investors get lulled into a sense of security when the VIX gets nestled at low levels. They never realize the mayhem about to unfold… even when it’s easy to predict.

So, here’s the true money-making trend to remember. Put this in your back pocket for next summer…

Throughout the VIX’s history, it’s surged from its July low to November 1 an average of 42.4% with a success rate of 89%. Over the last five and 10 years, the average return has been 33% or more, but the success rate is 100%.

The VIX is currently up 45% from its low last month.

But on the horizon, we still have September, which is historically the worst month for equities.

How are you going to prepare?

If you didn’t act on the VIX play, don’t fret. We’re always here to help. And we even have a special presentation available for investors by a millionaire trader who’s crushed Wall Street for years. He’s described as “unbeatable.”

How I enjoy a worry-free life, without fears over the latest headlines or the current crisis, is by planning. By recognizing trends and cycles, understanding that all assets move in waves – including volatility – and preparing accordingly.

And every trader and investor I know who does the same spends their days focusing on what really matters… not the next candle on the S&P.

Here’s to high returns,

Matthew