Markets have been up and down over the last month and there is no telling how long that will last, but often demonized stock market volatility is actually a great thing — if you know how to play it.
That’s where Money & Markets comes in with one of our many guides to profit on stock market volatility.
On Sunday, Federal Reserve Chair Jerome Powell indicated the U.S. economy could drop by as much as 30% in the second quarter during an interview on CBS’s “60 Minutes.”
But he also said growth will return in the third quarter.
It leaves a lot of investors wondering just what to do with stock market volatility pushing prices up and down with every headline.
The Recession is Here, But For How Long?
There is little question that the U.S. is in the midst of an economic recession — and potentially a depression. But what is unknown is just how long that recession will last.
Especially considering that just last week Powell expressed concern over how much the coronavirus pandemic will impact the economy.
When that news broke, the stock market plunged, setting off another big week of losses after hitting multi-year lows back in March.
Congress passed a $2.2 trillion economic bailout, but Powell said it may not be enough to rescue the economy as more than 30 million Americans have filed for unemployment in the last six weeks.
“Congress has done a great deal and done it very quickly,” Powell said. “The question is: Will it be enough? I don’t think we know the answer to that.”
The bottom line here is that stock market volatility isn’t going anywhere anytime soon.
The Stock Market ‘Is Just Like War’
Money & Markets Chief Investment Strategist Adam O’Dell says the stock market “is just like war.”
In war, you have long periods of boredom punctuated by times of sheer terror.
“If you think about it, that is just like playing the stock market. Eighty percent of the time, stocks go higher in very boring fashion,” O’Dell said in a recent episode of The Bull & The Bear podcast. “A minority of the time, you have wild swings of volatility and heightened market uncertainty.”
But investors typically look for ways to profit, even when the economy is down. And if you know how to play stock market volatility, profit you will.
O’Dell, who recently wrote about the biggest lies concerning volatility, has a tried and true, tested system he developed called 10X Profits, and it’s all about scoring big on volatility in the simplest way possible that literally anyone can understand, even novice traders.
“At its core, the 10X Profits service basically uses just two ETFs (exchange-traded funds) — one for risk-on when everything is good,” O’Dell said. “But when we have that signal that trouble’s ahead, we have one ETF that we move into that protects us.”
While it takes a lot of time to find the next Apple Inc. (Nasdaq: AAPL) or Amazon.com Inc. (Nasdaq: AMZN), that’s exactly why the 10X Profits method is focused more on simplicity to help investors find gains amid market volatility.
“I thought it was easier to figure out how to time correctly the major booms and busts in the broader global market,” O’Dell said. “If we can do that effectively, it’s a much easier and much more lucrative way to make money than to try and find the next big stock.”
So while Wall Street tries to figure itself out, there are ways you can profit from stock market volatility.