| By Jeff Clark, Editor, Delta Report If you’re an investor, think of stocks as party balloons. The best time to buy stocks is when they’re deflated pieces of latex. Most folks don’t like balloons when they’re deflated because they’re not that much fun. You can’t play much with a deflated piece of latex. Instead, people like balloons when they’re already inflated. In stock terms, that means when prices are already way the heck up. Stocks are a lot more interesting that way. They seem a whole lot more fun. So people buy them. And of course, that’s the worst possible time to buy in. Why? | Recommended Link | You Won’t Sleep After Seeing This Disturbing Video The U.S. stock market is on the verge of a massive event unlike anything we’ve seen in 11 years. In this video, a multimillionaire financial expert urges you to prepare immediately. Do nothing, and you’ll regret it. | | | | The New Bear When you buy stocks after they’ve become inflated, they’re vulnerable to “popping.” Any number of things can come along and prick the balloon, so to speak. And when you have a market like the one we have now – with the S&P 500 currently up about 270% since the low of the last bear market, even after the recent sell-offs – there are lots of things that can come along and prick the stock… You have rising interest rates. You have trade wars with China and an economic slowdown there. As I’ve been telling my readers, today’s market reminds me an awful lot of the 2007-09 bear market. We may well get a bounce in stocks over the short term. But my view is that stock prices will be lower one year from now than where they are today. That’s bad news for most long-term investors. But if you’re a trader – like me and my readers – there are actually three types of falling stocks you can profit from. Three Casualties The way to profit from falling stocks is through shorting, or betting on lower prices. But that raises the question: Which stocks should you short? There are a lot of pins that can prick your balloons. But stocks that accelerate the most on the downside and when the market rolls over are frauds, fads, and financials. First up are frauds. These are companies that have no honest business model. Their only purpose is to take your money. In a bull market, nobody pays close attention to their income statements and balance sheets. Investors are just riding the momentum. But you can find a lot of frauds that have made huge gains. And then, when you dig into their balance sheets, income statements, and cash flows, you go, “Why in the world is this stock trading at this level for?” That’s the situation we had back in 2000 with the dot-com stocks. It’s what we had in 2007 with a lot of the financial stocks. And it’s what we have today in a whole bunch of different things. | Recommended Link | Airing Now: “The Crash of 2019” It’s a new, must-see warning that could set the stage for one of the biggest and fastest investment gains of your life. It reveals how a crisis even worse than the 2008 crash could happen any day… And why it could either make you thousands of dollars this year… over and over again… or make you a victim of the worst market drop in 11 years. | | | | Fad Chasers How about spotting “fad” stocks? These are typically companies that change their names to take advantage of some overhyped situation or trend. In the dot-com bubble, for instance, a lot of companies changed their names to include “.com” to profit from all the internet hype. One I find particularly interesting is K-tel. It’s a Canadian company that sold disco records and music compilation albums via infomercials and live sales demonstrations. Well, in the late 1990s, at the height of the dot-com mania, K-tel was on the verge of bankruptcy until it decided, “You know what? We’re going to start a website and change our name to Ktel.com.” This little penny stock shot up to $34 a share in a matter of weeks. And then, of course, it went back down to pennies. Or take Riot Blockchain. The company used to be called BiOptix. It used to have five employees and did something in biotechnology for around 17 years. Then, in October 2017, the five employees decided, “You know what? We’re not going to do anything in biotech anymore. We’re going to mine for bitcoin.” They changed the company name to Riot Blockchain. And the stock went from $2 to $46 in two months. Today, it’s back down to below $2. So watch out for companies that chase fads. They’re often great shorting opportunities. Poor Fundamentals Aren’t Enough The third type of stock you’ll want to short are companies with flawed financials. Most of the stocks you want to short are in this category. Some telltale signs are high debt loads… sharp increases in accounts receivable… or low cash on the balance sheets. But none of this means anything until you actually have price action that confirms that the stock is ready to start falling. That’s an essential ingredient of any successful short bet. Take electric carmaker Tesla (TSLA). It has a ton of debt… its financials stink… and it can’t meet its production goals. But Tesla has been a terrible company to short. It’s been wildly chopping back and forth for the past two years. Anyone that’s held short over that time hasn’t profited much. Sometimes, stocks just aren’t ready to move lower – no matter how much their fundamentals stink. You have to wait until the price action confirms that before movement happens. And to determine that, you need to look at things like a stock’s moving average (MA). Don’t be put off by the name. As I explain in the trading glossary on my website, an MA is an indicator that smooths out a stock’s price movements by filtering out large spikes and drops. You can simply focus on shorting stocks that fall below their 50-day MA. But my favorite short signal is when a stock falls below its 50-day MA… and then comes back up to touch that MA… before falling again. That’s usually where you catch some serious downside momentum in a stock you’re shorting. So let’s go back to that fad stock we discussed earlier, Riot Blockchain (RIOT). 
The time to short RIOT was when it fell below its 50-day MA (see the red arrow on the chart above). You can see that the stock collapsed shortly after. Stocks on Sale Now, shorting stocks might not be something you’re comfortable with. And it’s not the sort of thing I’d encourage you to do with a large chunk of your portfolio. But even if you never short a stock, there’s still something you can do during the coming bear market. The most important thing about bear markets is that they put quality assets on sale. So I’d encourage Diary readers to look at the coming bear market with optimism… and to hold plenty of cash. A bear market is really just a Black Friday sale for stocks. If you’re a long-term investor, you’re getting the chance to buy quality stocks at dirt-cheap prices. Best regards and good trading, Jeff Clark
Editor, Delta Report P.S. Predicting a market crash isn’t a popular position to take. Naysayers will dig up any skewed statistic or chart to prove that the bull has a long life ahead of it. If you listen to those naysayers, you’ll do nothing. Maybe you’ll plug your nose and buy – which is a mistake. I firmly believe that when all’s said and done, 2019 will look very similar to 2008. But that’s not a bad thing. In fact, there are steps you can take today to ensure that you come out of the crash even richer than before. I recently released a free presentation that explains my thinking. And it shows you exactly how to profit while the market falls apart this year. But you must act quickly. This presentation will go offline at midnight tonight. After that, I can’t guarantee I’ll ever be able to share it again. Get the full story here. | 
没有评论:
发表评论