Two weeks ago, the market experienced a bout of turbulence (see chart below).
Early August turbulence …
Global equity ETF in 2024: up to 16th August
It now seems like a non-event but the media and headlines were sensationalist, as you’d expect.
That impacted sentiment, with some investors (or rather, traders) selling their positions – particularly the S&P500 index and tech stocks.
In turn, that enabled investors with cool heads to acquire more quality assets when on sale.
In line with my guidance from 2 weeks ago, stockmarket sales are always an opportunity.
In a nutshell this is how stockmarkets work. The only unknown is the timeframe for each occurrence.
This particular window was short but pound-cost-averagers could have capitalised on autopilot.
Those active in options will have seen attractive opportunities. I personally capitalised from the beach (see below).
2 lessons You Can Use …
Lesson 1. Profit with Options
Options are a great way to earn even higher income – particularly during bouts of volatility.
There are 2 ways to profit:
- Buy Cheaper: Options let you buy your favourite names cheaper – and you earn income of 1-3% per month
- Income Boost: when volatility rises, so do options prices. That means new positions earn even more
Whilst away on holiday for the last 2 weeks, I was actively placing new options positions – literally from the beach.
I deployed new options trades in a US Banks ETF, a Small Cap ETF, as well as extending my US Tech positions.
The correction helped make this even more profitable than usual. Generating almost enough income to fund the holiday …
My Options income for August so far … (despite the correction)
In summary: Options prices increase during periods of volatility – raising the available income on new positions
Lesson 2. Beware of Stop-Losses – they usually LOSE money
I don’t use stop-losses and most sensible investors (like Warren Buffett) know they usually lose money.
Deploying stop-losses during this correction would have meant selling near the lows.
The idea being that when you open a new stock/ETF position, you select a stop-loss price (usually 5-10% lower) at which you’ll automatically sell that position in the event of a decline.
The problem is that declines are always temporary. So, in the recent correction, a stop-loss would have exited you near the lows. That turns loss prevention into loss crystallisation.
Stop-losses sound compelling. Who wouldn’t want to stop a loss! But you should be sceptical of anyone that advocates stop-losses – especially for stocks.
In summary: A successful investor buys during the sales, instead of selling. Stop-losses usually make you do the latter.
Now is the perfect time to learn how to do this …
Our next Investment Academy starts on 16th September.
NEW – you can register now and start learning immediately, prior to the live classes.
You’ll have immediate access to actionable content to hit the ground running before the first live class:
- Investment Foundations Module
- Pound-Cost-Averaging Module
- Risk Profiling
- Asset Allocation exercise
- Return Objectives Calculator
This content will help create your investment strategy in the best way to start implementing it in September. Options will be covered during the main programme in September.
Register Now to get immediate access
Or you can book a call with me to ask any questions.
The Investment Academy has transformed the way thousands of people invest. Creating better, more diversified passive portfolios for Growth and Recurring Income.
Always Remember:
- Time in the Markets always beats timing the markets
- Stay Diversified
- Minimise those leakages: Fees, Inflation, and Taxes
- Financial Markets are a great source of recurring income
- ETFs, Balanced Funds and Options achieve all the above
- Being educated helps you outperform 99% of the population
… to ensure your investments work for YOUR financial freedom (not someone else’s)
And …
For more guidance, our Investment Academy will help you implement all of this in a step-by-step way.
Thousands of people have learnt how to diversify and pound-cost-average into low-cost, set-and-forget ETFs & Funds for inflation-beating growth. And Options to create recurring income.
Click here to learn about our Investment Academy
Finally …
– Don’t take the above as advice as it may not apply to you personally
– Your Capital is at Risk
– You may not be covered by the FSCS
– Anything mentioned in a podcast or in a previous article was valid at that time and may not continue to be now
