Market Volatility: Zoom Out, Gains Ahead?
You need to be two things in this market:
I know, I know. Easier said than done. But if you can do that, you can make a ton of money in a volatile market recovery.
Once you have your Strong Hands, then you can lean on the Rules of the Game to navigate the markets … and even use this time as a great buying opportunity.
During this volatility, America 2.0 tech stocks have cleared out nearly all of their sellers, which is a great sign that gains are on the horizon.
Plus, we’ve seen SO much momentum flood these stocks and accelerate them! There’s definitely more growth ahead.
Watch today’s Market Talk to find out when you can expect the market to take a turn for the better. We’ll even show you an actual “zoom out” chart that puts this market into perspective:
Current Market Conditions & America 2.0 Stocks
Amber Lancaster: Ian Dyer, our senior investment analyst at Bold Profits and co-editor of several of our trading services, is joining us to give his perspective on current market conditions. In particular, our America 2.0 focused stocks. Hello, Ian. Good morning. Good to see you.
Ian Dyer: Good morning, Amber. How’s it going?
Amber: Doing well. Hanging in there through these market gyrations, but we know the long-term game on this. I’m glad you’re here to give us your perspective. Before we begin, remember to click the subscribe button for this channel. Also, you can sign up for our free e-letter at BoldProfitsDaily.com.
And, if you are looking for a monthly newsletter that has had stellar returns over the last several years since 2016, that’s Paul’s Profits Unlimited monthly newsletter. You can find out more by clicking the strong hands and getting all the details.
I can tell you this newsletter — I was looking at the returns Patrick sent over this morning — we have a 28% annualized return for Profits Unlimited since 2016 and an overall, since-inception gain of 256%. That’s always good to see.
For today, I would like to focus our discussion on current market volatility and get your perspective. First off, I appreciated your tweet last week regarding the correction. I thought it was spot on. Here it is for everyone to read,
“This correction in America 2.0 stocks reminds me a lot of a drop in growth stocks in September through December 2018, which lasted three to four months. Lots of stocks were down 50% or more from their highs.
It felt like it would never end. But patience paid off and I believe it will also pay off this time.”
For my first question to you, Ian, I am putting up this chart of the Nasdaq after Friday’s close which shows from its recent peak around February 15 it’s down about 5%. This is a recovery from the February peak to the March 25 trough where it was down 25%. What do you think is causing this three-month price gyration in mostly tech stocks?
Ian: I see the rally we had from last March to this past February, which was the top for a lot of these America 2.0 stocks, as two different rallies. One of them was from March to October. That was when people were buying that dip and then soon after the America 2.0 stocks hit new highs, much sooner than the big indices and big tech stocks and America 1.0 stocks.
That rally was around 220% from mid-March to mid-October. Then things took a break for a month. Then ARKK — which is what I’m referring to when I say it had a 220% gain — had another 80% gain from November through February. To me, that was a bit euphoric.
People seemed to forget that these stocks can go down too. A lot of people bought in during that three-month period. At that point, there was still some upside but it wasn’t what people were thinking. When a lot of people see stocks have gone up 500% in a couple months, they want to buy in and get another 500%.
Unfortunately, that’s not how it works most of the time. I think when that mindset sunk in to investors and traders, people started to take profits who bought in during that first rally. That led to some panic selling, some stop losses being hit. It was a one-sided trade around January or February.
A lot of people had bought in. There weren’t many people to buy the dips at that point. So when these people went to take profits or panic sell, there was not the support there that had been there before. For the past three months, obviously it’s taken a 180 turn. Now we are seeing the opposite.
I believe there’s some degree of capitulation at this point. A lot of the stocks I follow are down 50% or more. I do think we are now starting to see some buyers come in. I think anybody who was going to sell has sold. It’s pretty much cleared out all the sellers.
It’s going to flip back and these stocks are going to get bid up soon.
Amber: That’s really good information for us to follow. My other question is — and I know you don’t have a crystal ball — when do you suspect this to end?
Ian: The bottom we have seen so far has come after earnings season. A lot of companies I track reported great earnings and raised their expectations for 2021 and even some for 2022. That has to reconcile with the market at some point.
I think based on what I have seen before in these situations where companies report great earnings and there’s still selling afterwards, that’s usually the last big batch of selling. After that, it sinks in that these companies are good investments. These industries aren’t going anywhere, they are already established.
A lot of these companies were speculative just a few years ago. It wasn’t a guarantee that their business was going to take off. But with all the adoption we have seen in these America 2.0 industries, I think this is a way better investment than it was even a few years ago.
I think these earnings reports were a very good sign. The selling afterwards was limited. I think well in advance of the next earnings season, which starts around late July, we will see a total reversal and these stocks are going to go back up.
Amber: Late July. Thanks for that. It’s good to hear. In the meantime, what should our America 2.0, Fourth Industrial Revolution investors do to weather any gyrations going forward?
Ian: Like Paul and I say, we are in these stocks for the long term, at least one to three years. We would recommend to not go all in all at once. We would recommend to buy small amounts over time. When you are doing that when things are going up, it’s much easier. We realize that.
But when things are going down, this is the time that a lot of gains in the future are made when you buy high-quality companies in high-growth mode at 50% below their highs. We would recommend to keep putting small amounts in these stocks over time.
That’s how you can make a lot of money in the long term.
Amber: Good information as always, Ian. Thank you for sharing your perspective with us today.
Ian: Thanks for having me on.
Amber: You’re welcome. See you soon. Take care.
One tip Ian often shares with Bold Profits Nation and all of us behind the scenes is all about “zooming out.” When we zoom out on price charts it helps us put current volatility in perspective.
The Nasdaq fell nearly 78% in the 2000 Tech Wreck, 55% in the Great Recession, nearly 24% during the 2018 correction Ian mentioned, 32% in the onset of COVID-19 pandemic and so far in present day about 8%.
Despite these corrections, the index is up overall 975% through present day since the 2000 Tech Wreck. This chart shows that even during corrections the index’s overall trajectory is up. To weather any corrections, please make sure to follow Paul’s Rules of the Game.
Number one is to never make an all-in bet on one stock. Number two is to equal weight your positions and buy at least five stocks at minimum. Number three is to buy low and buy slow. Keep cash on the side, a 30% minimum, as a volatility buffer is number four.
Of course number five is to take profits on the way up according to your risk tolerance. As Paul shared in our latest investment call,
“If you follow Rules of the Game and you have cash, you can buy. Right now you are getting prices that, when you look back three years from now, we will see these as no-brainer trades.
This is the biggest no-brainer moment for getting in these America 2.0 stocks. It’s an even better moment than 2018 because our idea set is so much better.”
In 2018, the concept of buying 3D printing stocks was still in its infancy. Fast forward to today and Paul has recommended several pure play tech megatrend stocks and Profits Unlimited subscribers now have direct plays, actual companies in 3D printing, artificial intelligence and Internet of Things.
Today these are multi-billion-dollar stocks. Paul sees it all due to the acceleration that the post-pandemic environment has created. There’s now so much momentum behind all these America 2.0, Fourth Industrial Revolution stocks. This is such a better time for investing.
We know this is a tough moment for people who have just gotten in the market in the last six months or so, especially the America 2.0 market. Paul forecasts when looking out one, three, five or seven years, those Strong Hands investors will likely be sitting on a fortune.
So in order to not miss out on these results, one must be fearless. One must be patient.
One last thing for today. To get to the big gains you have to wait out volatility and bravely buy when opportunities feel slim.
Because at the end of the day, the truth is that’s when you come across your most life-changing opportunities. Just as Paul says:
i think when they look back at this moment the sellers of our stocks during this period will point to three things — fear of being wrong, the desire to do something and impatience. stay strong. i'm still v v #BOP on #A2O #4IR
— 🇺🇸Paul Mampilly (@MampillyGuru) May 13, 2021
you can see why so few people actually end up making money in the stock market. what's needed — patience, persistence, time for things to play out — it's simple yet not easy. the market grinds people out and then those that are left get the rewards. stay strong. stay #BOP
— 🇺🇸Paul Mampilly (@MampillyGuru) May 13, 2021
Ask the Strong Hands who held through the market correction in 2018 and 2020. Even through the current dip, stocks in one of our model portfolios are flying high — and once this period is over, those who stayed in and were invested could reap the remarkable rewards.
Don’t be fooled by the panic. Don’t let your next big opportunity pass you by.
Editor, Profits Unlimited