Weekly Paid Newsletter 01/30/2022
I Made $10k With My $100k Portfolio In One Day
The subtitle is probably the most clickbait of the 60+ articles I have been writing, but I didn't want to take the opportunity to tell you about the experience of one of the subscribers.
This week has been marked by the enormous volatility in the markets. The VIX has reflected this volatility, which reached nearly 40 during Monday's session.
This spike in volatility was driven by massive volume in the world's two largest ETFs, the QQQ and SPY. We have never seen this amount of volume in a single day.
As shown in the image above, volume spikes occur during recessionary periods such as 2007-2008 and March 2020.
The most curious thing about Monday is that despite dropping more than 2% during the session, the indices were very close to ending in positive territory.
This indicates the enormous uncertainty in the markets. But it seems to be unanimous that we are closer to seeing a -10% decline in the S&P500 than seeing ATH this year.
As you know, we benefit from the imperfections of the markets, and we benefit a lot. Several times we have shared with you days where we have made as much as 13% in one day. However, we have never had days with declines more significant than 6-8%. This makes our portfolio much more robust.
This Monday was one of the joyous days (+10%), and in the middle of the night, I received an email from one of the subscribers, which filled me with satisfaction.
We see how our strategy can benefit from market asymmetries and with shallow risk as 40-50% of our portfolio is in very low-risk assets (cash, gold, silver, etc.).
In addition, we use these downturns to 1) monetize and 2) buy at lower prices.
What is tremendously significant in this case is that these gains have occurred during not very steep market declines. As the markets and volatility increase, we will see our investment grow exponentially. Others have already done it. And it will happen again.
This week has been a week in which the FOMC has made statements and announced, as it could not be otherwise, that rates remain constant (0.25%) but could rise to 4 times throughout 2022.
If the market is already so bearish with absolutely nothing that has happened and with central banks still injecting money, you can prepare yourselves for what is coming.
In last Wednesday's statements, inflation was also discussed as it could not be otherwise. The most curious thing is how the inflation discourse has gone from: "inflation is transitory" to "we had better remove the adjective transitory" to end with "high inflation is good and we continue to maintain our 2% target". What person on the face of the earth believes that 7% inflation is good?
These next weeks will continue to be full of volatility. Markets are irrational and investors even more so, and therefore, anything could happen. What is clear to us is that during this H1 2022, the markets will have a clear downward trend.
We will be selling while trying to buy at discount prices, as we have done this week.