Chris’ note: As I’ve been showing you, the traders we feature here at the Cut are on fire right now. Last week, we looked at how Larry Benedict gave his Opportunistic Trader subscribers the chance to end the first half of the year up about 149%. And last Friday, Jeff Clark gave his Delta Report subscribers the chance to make 300% on one trade in just 48 hours.
Unlike most investors, Jeff has racked up some of his biggest wins in bearish markets. Below, you’ll hear more from Jeff on his most recent one… and why he’s so excited about trading in this kind of environment.
Chris Lowe: Stocks are in a bear market. Crypto, too. This is one of the toughest market environments of the last decade or so.
You used to manage money for folks in Silicon Valley. You’ve run trading advisories for about two decades. What mindset do our readers need to get through this?
Jeff: Yeah, markets are whacked out right now.
First, understand that this will pass.
The current market turbulence shouldn’t be much of a surprise if you get what happened in the pandemic years of 2020 and 2021.
We had an unprecedented era of funny money. Congress approved stimulus measures that unleashed more new dollars on the U.S. economy than ever before. In total, these measures created $5 trillion.
Everything went up – stocks, cryptos, pre-IPO (initial public offering) stocks. So it was a great time to be an investor.
But like all these funny-money periods, you end up in a bubble. This time, people were buying digital images [NFTs, or non-fungible tokens] of apes and rocks for millions of dollars. Then inevitably there’s a hangover period.
In the late 1990s, we had funny money with the dot-com bubble. The party ended in March 2000. Over the next two and a half years, the tech-heavy Nasdaq fell as much as 77%.
In 2007, we had funny money in the housing market. Everyone thought they could get rich flipping real estate. Then the subprime market crashed. It took the S&P 500 down as much as 54% from 2007 to 2008.
But these bear markets passed. And stocks continued their long-term upward trajectory.
Second, understand that during bear markets you can become phenomenally wealthy if you use the right strategies. That means not relying only on a buy-and-hold mindset.
Chris: That’s not how most folks see it. The mainstream take is that you make money in bull markets and lose money in bear markets.
Jeff: If you’re solely a buy-and-hold investor, a bear market hurts. Eventually the pain will end. But it’s not fun while it lasts. The best thing you can do is wait it out.
It’s different for traders. In bear markets, stocks are unusually turbulent – both up and down.
The general trend of stocks is downward. But after stocks stretch too far to the downside during the sell-offs, they have explosive rallies.
So you have a lot of chances to bet on the upside as well as the downside.
The S&P 500 can jump 5%, 6%, 7%, even 10% in a week. I expect we’ll see that several times in the current bear market.
If you keep that in mind… and ditch the mainstream narrative that it’s all doom and gloom… you should be able to do pretty well.
I know this from experience. One of my best years was 2008 during the worst stock market crash since the Great Depression. I also had two very good years in 2001 and 2002 right after the dot-com bust.
I didn’t suddenly become a better trader. The environment was just better for big wins. I had many more shots at winning trades than I typically get in bull markets.
Chris: You’ve been getting a lot of great subscriber feedback [see today’s mailbag below] on one of the trades you recommended at your Delta Report advisory.
On July 13, you issued a buy alert for blue-chip banking stock Citigroup (C). You closed the trade 48 hours later for a 300% gain in the model portfolio. That’s a massive win, especially during a bear market.
Jeff: I love it when my readers make money. And that triple-digit win makes me even more excited about the strategy I designed to take advantage of the current market conditions.
The 2022 environment is similar to what we saw in 2001, 2002, and 2008 – my best trading years. So my team and I are going back to strategies that worked well in those years.
They probably won’t work very well two, three, four years from now, when the bull market is back. But that doesn’t matter. What matters is they work really well now.
Last week, I hosted a free online briefing about how this strategy works. But my publisher made a replay available here.
In it, I share the signal you can use to spot these triple-digit trades in advance.
I even gave away three stock names and ticker symbols approaching this setup now. Each is worth a potential $10,440 or more.
So make sure to check it out.
Chris: Thanks, Jeff. And congratulations on your big win for your readers.
Jeff: My pleasure.