If Monday's market bloodbath – and Tuesday's huge rally – have you scratching your head, you're not alone.
I lost count of all the reasons – many of them half-baked – that the cable TV "experts" tossed out.
Yes, they rightly pointed out plenty of "triggers" out there that could indicate a return to the kind of volatility we saw back in 2015 and 2016.
But I firmly believe the one big reason for Monday's historic 1,100-point drop in the Dow Jones Industrial Average was computerized trading.
The software that hedge funds and Wall Street houses use are filled with algorithms designed to protect even meager profits for these high-frequency traders. And on Monday, as I'll show you in a minute, those machines struck back.
Here's what I think that means: After a couple of complacent years on the Street, it looks like we are headed for choppy markets once again. I'm calling this bout of turbulence the "Fat Finger Market" (that "title" will soon make sense).
But that's fine. We can deal with some choppiness.
You see, I'm still pumped up about Silicon Valley tech investing… about finding ways to play the cryptocurrency craze… and about the unstoppable legal cannabis industry.
And I know you are, too.
That's why today I'm delivering to you three "Fat Finger Market" tools you can use to turn anything – bloodbath or rally – into money in the bank.
Let's review the action on Monday…
There was some weakness early in the day after Friday's losses.
But suddenly, while I was talking about some upcoming Strategic Tech Investor reports with one of my editors, all hell broke loose.
It was almost like someone hit the wrong key on the market's "computer" and sent shares across the board sharply lower.
The Wall Street Journal quoted one harried trader as saying, "Did someone just fat finger this?"
Well, in a sense, yes…
As I see it, as the market marched higher into the record books over the past few weeks, those software algorithms we talked about earlier just kept tightening the pros' stop-losses. And as some anxious traders took profits early on Monday, it triggered a wave of algorithm-driven "Sell" orders that in turn set up even more "Sell" orders.
It was a mess. But temporary carnage.
Please don't think I'm glossing over any problems areas. In fact, let's list them, just so we all know what we're facing here.
- The markets were concerned that we could see another government shutdown over budget talks.
- Janet Yellen just retired as chair of the U.S. Federal Reserve.
- At the same time, the Fed's interest rates are on the rise.
- Lower unemployment and rising wages could lead to inflation.
That all sounds bad. And it could be.
But I've been analyzing and investing in the markets for most of my life, so I tend to take these things in stride – and look at the bigger picture. And as I survey the economic landscape, I still see plenty of reasons to be optimistic, especially about making big money in tech.
New tax cuts for business will mean that companies will have more cash on hand and higher profit margins. That's especially true for big tech firms that can now bring back several hundred billion dollars in offshore profits.
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That's money they can use for researching and developing the next round of innovative consumer and business technology. Plus, they'll be rewarding tech investors like you with rising dividends and boosted share buybacks.
We also have a very low unemployment rate hovering around 4%. Economists now forecast first-quarter GDP growth of 5%, the highest since 2009.
In other works, the choppiness that we may see more of in the weeks ahead has little to do with economic or financial fundamentals.
But that doesn't mean we can simply throw caution to the wind. With that in mind, I want to share the three tools you need for this volatile "Fat Finger Market."
Take a look…
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.