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As markets continue to rise, volatility has been near record lows. But in the past couple of weeks, we've seen glimpses of a return to volatility -- and a possible pullback in the works.
People forget what that's like. They get lulled into a sense of complacency when the stock market -- and their own personal portfolio -- is gradually pacing up each and every day.
But remember: This isn't normal.
A pullback is bound to happen sooner or later. A full-blown "correction" (when the market drops 10% or more) is completely normal.
That's why I recently interviewed our very own Jared Levy to get his take on the market, what's going on in Washington D.C., his strategy, and what kind of trades he's making recently.
Insider: OK Jared, you've been telling Profit Amplifier readers for a while now that you're concerned with the market's fundamentals. Care to elaborate briefly?
Jared: There are certain times when you need to "throw out the textbooks," and this is certainly one of those moments. The Trump Trade and overall momentum here and in certain foreign markets is not something you want to stand in front of.
I believe it can keep going, even though things are likely to be more volatile going into the back half of 2017.
With that said, there are still many pockets of weakness (small caps, retail, etc.) as well as other risks, such as spotty economic data, that are forming cracks in the market’s foundation. But much of the negative is being ignored because the S&P 500 is seeing overall earnings growth.
And even though the earnings progression can only be attributed to slight economic improvement, cost cutting and share buybacks... it's enough to push stocks higher.
Remember that stocks trade on the belief that things are improving. We all know that faith can sometimes trump fact.
Insider: Speaking of the Trump Trade, can you expand on that? With things in Washington (and around the country) growing more contentious by the day, are we starting to see this fade? I also understand you have some personal experience with a certain, shall we say, infamous former member of the administration...
Jared: D.C. feels more like a circus than our capital. The Scaramucci situation is just one of many disturbing incidents that give me less confidence in our leaders' ability to keep things "on the rails."
Having worked with Mr. Scaramucci at CNBC and knowing his "talkative" personality, I was shocked when I heard of his appointment. But the speed of his removal made me doubt not only our administration's vetting process, but its stability overall (and I'm a fiscal conservative). Oddly enough, it's Trump's unpredictability that's partially keeping short sellers away.
I try to steer clear of politics, as it's often the cause of more problems than solutions. But I have to say, the bipolar, often manic state of things... and the media's general disdain of the President certainly introduces another market risk factor.
The media barrage could makes things even more difficult for our President. For example, if you own an iPhone, you might notice that nearly every story, every day on Apple news is a Trump bash coming from CNN, The Washington Post or The New York Times. They are in full-on attack mode, and frankly, I don't think the consequences will bode well for markets.
I don't care who you voted for, Americans need unbiased facts, not flammable stories that rile the masses and create further distrust in the government.
I'm betting things will get uglier in Washington, and yet again, that's another risk we need to factor in.
Insider: You just issued a new report for subscribers: Your Guide To 'Raiding' The Stock Market.
Why do you think it's so important that people try your options strategy before the market starts to top out?
Jared: Over the years I've been approached by thousands of investors who all ask me what stocks to buy. Everyone always wants a "hot tip."
While it's easy for me to rattle off a few good companies that might go up in value, the question then becomes timing, and the most important part is "when do I sell?"
If you ask me, buy and hold is mostly dead -- and even if you're successful at socking away stocks, you'll have to weather severe volatility and miss out on more profits if you bought the dips and sold the rallies. In short, you're missing out on A TON of potential gains and not minimizing your losses.
But those aren't the only reasons most investors don't fare anywhere near as well as the pros. The average investor is simply looking at the market the wrong way and not utilizing all the tools at their disposal. It's sort of like driving a Ferrari on a crowded, cobblestone street, with one hand and never taking it out of first gear. Not what I would call efficient or fun by any stretch.
My secret lies in both proprietary analysis, but also in my "raiding" technique. I know the same sounds a little Indiana Jones-ish, but it's really how I operate. Get in, get the small but very valuable treasure, and get out.
I use powerful, but simple methods to turn a 5%-10% stock move into a 20%-70% gain. And I rinse and repeat over and over.
There's no reason to pay a ton of money to a financial advisor who's likely more a salesman than a trader. That's why I'm always looking to get the word out about our strategy -- and why we keep publishing Profit Amplifier at a price that's accessible for as many regular investors as possible.
Many investors hold strong opinions about the 200-day MA... but is it actually important?