The Real Secret to Making Money When Faced with “Headline Risk”

Keith Fitz-Gerald Sep 04, 2019

A bad day in the headlines is almost always ultimately good for your portfolio.


Today we’re going to talk about why and what you can do next to press your advantage.

Here’s what you need to know.

The secret to trading “headline risk” isn’t really a secret.

Headlines come and go… it’s the emotions that drive ’em that trip up most folks.

At least today anyway.

Think about this for a moment…

One minute there’s a break in US-Chinese relations and the Dow goes on a 300-point streak higher. Next minute the manufacturing data comes in a point weaker than expected, and it drops precipitously.

The on-again, off-again relationship between what you understood to be good news is broken. And bad news… well, let’s just say it’s anybody’s guess.

So, how do you get around that?

It’s easier than you’d think for reasons I laid out on Tuesday during an appearance on Varney & Co.

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First, avoid doing anything rash.

Professional traders want you upset, scared, uncertain, and irrational. That way it’s easier for them to separate you from your money.

Trading, contrary to what Wall Street would have you believe based on scores of television commercials, is nasty. Professionals are not out there to build their retirement or ensure you build yours.

They want to make as much money as fast as possible by taking your money away from you every chance they get. And headline risk plays a big role in that.

Wall Street firms don’t help or, more precisely, won’t. They stand to make hundreds of millions a year in commissions and related trading activity, all of which grow exponentially when individual investors get anxious.

Many will trade directly against the individual investors who are their clients if given the chance. The situation isn’t as bad as it used to be but don’t think for a New York minute that it isn’t happening.

Wall Street sold the rest of us down a river a long time ago.

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Second, stick to what works and continue to buy.

Even if there’s more selling ahead.

The idea that you “buy low and sell high” has been around since the dawn of time for a reason.

It works.

In fact, the adage has proven itself repeatedly.

Two of my favorite Total Wealth Tactics – “Dollar Cost Averaging” and its related cousin “Value Cost Averaging” ensure that you continue to buy in at regular intervals which does three things: 1) actually spreads out risk, 2) lowers your overall purchase price, and 3) boosts your returns.

What’s more, both Dollar Cost Averaging and Value Cost Averaging can be especially powerful in down markets because they force you to buy the dips on down days everyone else fears at price points that they won’t touch.

You’re far more likely to score the deal of the century than you are to get burned.

People tell me all the time that they’re scared.

I get that.

Emotions run high when the headlines play to your fears.

What I am suggesting is that you harness the logic to overcome that by recognizing that the markets have an upward bias over time and aligning your money to play to that positive possibility rather than cowering in fear.

Bear markets are not something to be afraid of but a celebration you can pick up great companies far less expensively than other people believe possible.

Again, I get that this doesn’t feel right.

But, so what.

Investors have an abysmal record of predicting short-term market moves ahead of time let alone correctly.

Especially when it comes to stocks like Inc. (NasdaqGS:AMZN), for example.

I’ve told you for months that Amazon which is now trading at $1,788.13 a share could double based on two things: big data and growing “Prime” related membership activity.

RBC Capital Markets has recently confirmed my thinking with a report suggesting the stock could hit $2,500 a share as one-day Prime-shipping increases subscription revenues, a 40.75% jump from where it closed last Friday; that’s lower than my target of $3,000, but the point is that others now see a higher trajectory, too.

That’s why it’s important to shift your thinking.

Think for a moment… about how many investing trends you’ve missed out on, even though you knew better and you knew that they were going to be big.

A bad day in the headlines is almost always ultimately good for your portfolio.

And your money!

Until next time,


PS: If you love Inc. (NasdaqGS:AMZN), chances are you’re going to find Keith’s two newest recommendations really exciting. He’s putting the finishing touches on the latest two momentum driven marvels in Straight Line Profits, a service that’s produced 17 triple-digit opportunities this year alone.

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