Chris’ note: Markets have been brutal since the year began. And former hedge fund manager Teeka Tiwari says there’s more carnage to come…
Below, he shares why – and why you shouldn’t panic. As you’ll see, you don’t need perfect timing to make fortunes in the markets.
I recently attended a crypto conference in Pennsylvania. To my surprise, I was the most popular guy there.
Despite the significant pullback in crypto… many people came up to me and asked, “Should I buy more bitcoin?”
On the surface, that may seem like a bullish case for bitcoin (BTC). People are still buying the dip.
But to me, it’s a sign the crypto market hasn’t reached a bottom yet.
In a real bear market, people don’t ask you if they should buy more of anything. They’re not buying at all.
This happened during the Crypto Winter bear market of 2018–19. No one wanted to talk to me about crypto when I went to events.
Some even mocked me for my predictions. They said things like, “Hey T, how’s that magic internet money doing?” and “How’s your $40,000 BTC prediction working out?”
When investors hate an asset that much, you know you’re in a bear market.
So when I go to a crypto event and am still the most popular guy there, I know the bear market isn’t over.
And right now, I see signs there’s more downside to come…
As I’ve been warning my readers, there’s a liquidity crisis in crypto. It may force more overleveraged companies to sell off their bitcoin and Ethereum (ETH).
Stocks aren’t out of the woods yet, either.
Even with the current pullback, the S&P 500 is trading at 19x earnings. And the tech-heavy Nasdaq is at 40x earnings.
They’re both so wildly overvalued, the slightest bit of bad news could send them back to their 2022 lows… and probably break below them.
And things might get worse as companies continue releasing their Q2 earnings.
In June, 93 companies lowered their forward 12-month earnings forecast. Only 73 companies revised earnings higher.
So 56% of earnings revisions were to the downside last month. That’s the most since June 2020, when the pandemic ruined earnings forecasts.
I’m not trying to make you panic. Instead, I want you to mentally prepare for what’s ahead.
You’ll probably want to sell your high-quality assets in the coming days and weeks… And that’s something I don’t want you to do.
Many readers write me asking, “Teeka, if you’re so bearish in the short term, why don’t you just sell all your positions and buy back in at the lows?”
I’ve been in the markets all my life… I’ve become wealthy as an investor… And I’ve never been able to consistently time the market like that.
Maybe I’m just not smart enough to time markets.
But I’ve learned over the years that you don’t need perfect timing to make fortunes in the markets. You just have to use sound position sizing to invest in a market megatrend and stay the course.
I’ve built a successful track record as a newsletter editor by recommending world-class assets and holding on.
Since I took over our Palm Beach Letter advisory in 2016, the model portfolio’s average annual gain is 147.8% – even with this current market pullback.
The average annual gain of the S&P 500 over the same time is 12.9%.
We do it by owning world-class assets that generate income through dividends or yield. Then we put some of that income into “asymmetric” bets – ideas that can turn tiny grubstakes into life-changing gains.
So even if our asymmetric ideas blow up, my subscribers haven’t put their current lifestyles at risk.
This strategy may sound boring. But it sure beats the constant in-and-out trading Wall Street wants you to do.
Retail brokerage firms want you to try to time the markets… even though they know it’s nearly impossible.
That’s how they make their fees. Any time you make a trade, they get paid (whether you see a commission or not). So the more trades you make, the more money they make.
But at Legacy Research, we’re subscription-based. We don’t cash in on the number of trades you make. So I have no reason not to tell you the truth.
And that truth is that time in the market will generally outperform timing the market. So don’t sell your quality assets into weakness.
Of course, not every idea will work out.
We still may need to exit ideas if there’s fraud, if management strays from its core business, or if a company loses its competitive advantage.
Our strict position sizing rules keep those losses manageable.
So what do you do to take advantage of the current volatility without taking outlandish risks?
Right now, the most profitable strategy I’m using with my own money is generating annualized returns of as much as 60%.
It’s rare when I can use this strategy because these types of uncommon gains come during what I call “Anomaly Windows.”
These are brief periods in the market when blue-chip stocks can deliver crypto-like gains in just a few weeks.
It’s one of the few opportunities to make asymmetric gains from conservative companies.
Wall Street elites hope you never find out how Anomaly Windows work because they make so much money from them. The last thing they want is a bunch of “amateurs” dipping into their honey pot.
But I’m pulling back the curtain in a free, urgent event tomorrow at 8 p.m. ET. I’ll explain what the Anomaly Window is… and how you can use it to make crypto-like gains from “boring” blue-chip stocks in today’s market.
You see, despite record-high inflation and a painful market pullback, there’s an Anomaly Window on the horizon that could return 21 years of S&P 500 returns in as little as 12 weeks.
It’s a rare opportunity to recapture the gains you may have lost in the first half of the year and position yourself to make much more.
But you need to act now. This opportunity could be gone before the end of the month.
So go here to reserve your spot for tomorrow’s event. When you watch, I’ll give you a free list of stocks I’m using to profit from this Anomaly Window.
Let the Game Come to You!
Teeka Tiwari
Editor, Palm Beach Daily