The stock market is sure to face a whole set of challenges — some old, some new. And if history is any guide, there could be more volatility on the horizon. However, one trading strategy is perfectly suited to keep you profiting this month.
The Dow fell as much as 971 points as Evergrande turned into a household name. Fast-forward to today, and those losses have been completely erased. Suddenly, Evergrande doesn’t matter anymore! Trying to stay one step ahead of this market is enough to make your head spin … unless you understand the unseen dynamics that are driving the rapid ups and downs lately. It has little to do with Evergrande. Rather, there’s an obscure corner of the stock market that has flown under the radar, but has grown to become a dominant force. As an investor, the dangers it poses to you are very real.
Ray Dalio, billionaire hedge fund manager, uses risk parity at his quant-based hedge fund, Bridgewater Associates. That’s because it makes all the difference in the world to your investing success. It’s the concept of investing based on allocation of risk using volatility instead of other commonly known techniques (such as market cap). You buy the same stocks, but you put LESS money into higher volatility (riskier) plays and MORE money into lower volatility (less risky) ones. Then you sleep much better at night! Your goal is to have your portfolio as a whole rise over time, with the least amount of fluctuation along the way. But to make this easy, you need…
It turns out that this is a pivotal week. We have three crucial events that will determine if more record highs are in store, or if the stock market will finally experience a pullback.
Here’s your guide to navigate the volatility…
A reason to stay smart and tough.
Editor of Alpha Investor
Chief Investment Strategist of Money & Markets
Director of VIP Services
Research Analyst
Founder, Agora
Editor of Strategic Fortunes and three elite services
Financial Analyst
James Hickman (aka Simon Black) is an international investor, entrepreneur, [...]