How to Profit from China’s Latest Tariff-Tantrum
Dow futures were down more than 500 points when I took to the air on Monday morning with Stuart Varney on the Fox Business Network’s aptly named, Varney & Co. They would go on to drop more than 700 points in heavy trading by the time I took the stage here at the Las Vegas MoneyShow.
I wasn’t bothered, however.
Specialized tactics like the one I want to share with you today make big down days something I look forward to because of the profit potential they create.
Today, I want to talk about a specialized tactic I call the “LowBall Order,” which can help you line up ginormous profits during massive selloffs that cause other investors to run for the hills.
If you’ve never heard the term before, a “Lowball Order” is one of the simplest, yet most powerful orders available today, especially in volatile market conditions, like we have right now.
They’re great for at least three powerful reasons:
- You can place them in advance.
- You don’t have to be at your computer to line up big, big profits.
- You don’t risk a penny until the stock you want to buy meets YOUR risk reward criteria.
First, you line up with one of the six Unstoppable Trends we’re following: Medicine; Technology; Demographics; War, Terrorism & Ugliness; Scarcity & Allocation; and Energy.
Second, you select a stock that’s been beaten down, or is otherwise out of line with long-term expectations, fundamentals, and earnings potential. Ideally, this isn’t just any old stock. It’s one that you’d buy if it ever went “on sale” because it makes “must-have” products and services the world has to have.
I talk frequently about maintaining a “buy list” of companies you want to own if you get the opportunity to pick them up at a dramatic discount.
Great examples at the moment include many of the big tech stocks we talk so frequently about: Apple Inc. (NasdaqGS:AAPL), Alphabet Inc. (NasdaqGS:GOOGL), Amazon.com Inc. (NasdaqGS:AMZN), or Microsoft Corp. (NasdaqGS:MSFT).
A “buy” limit order will typically be filled when – and only when – the stock hits a set price or lower. Meanwhile, a “sell” limit order is only typically filled when – and only when – the stock hits a pre-set price or higher. Either way, you’ll have to tell your broker how long you want your limit.
Third, you pick a price – to the penny – that matches your individual risk tolerance, your investment objectives, and your belief about what the company is really worth. While there is no hard-and-fast rule here, many traders find being within 10% and 15% of the most recent annual low is fertile hunting in choppy markets.
Fourth, you place your order to buy “XYZ at $50 per share or less, GTC” – meaning good till cancelled.
Depending on how sophisticated you are, or even want to be, you also can tack on special instructions including “GTD” which means “good till a specific date” or “AON” which means “all or none” as in, the trader has to fill all the shares requested in a single trade or it doesn’t get executed. There’s even “fill or kill” which means the order is executed or it ceases to exist (which is great if you want really aggressive fills on days that other folks shivering in fright).
Then, you sit back and wait for a price dip. Why and when really doesn’t matter. The markets can react to all sorts of things – trade tariffs, headlines from China, Putin’s latest move, a misguided Fed.
What you’re doing here is laying a “profit-trap” in advance of conditions that you know favor your money, rather than the institutional traders who would otherwise take it from you.
The Mechanics are Simple
Lowball orders are technically “limit” orders. That’s “Wall Street speak” for an order to buy or sell shares at a specific price or better. Unlike “market” orders, which go into effect the moment you place them, limit orders trigger only when prices reach the limits you’ve specified.
It’s a Total Wealth Tactic that allows you to purchase or sell a stock at a specific price or better – rather than whatever price the market wants to give you. However, a limit order does not come with a guarantee that it will be executed, unlike an order to buy or sell at market price.
The point of this tactic is to pay the price you want (or sell at the price you want). Whether that happens today, tomorrow, or six months from now is moot. To paraphrase my grandfather, who played professional baseball in the 1920s, and who swore he personally heard the great Yogi Berra say this: You miss 100% of the swings you never take.
Lowball orders help you prepare in advance for conditions that favor your money. Placing them doesn’t cost you a thing, and you’re not risking one red cent until the order executes…
…and then you’re off to the races.
So forget about the fact that China won’t make a deal.
Concentrate on which companies you want to buy when they “do.”
Until next time,