Updated: February 21, 2021
The global financial market is in a rough patch. Everything is red and many are saying that we are all in the midst of history being made.
The crash and volatility in the stock markets right now is one we haven’t seen since the 2008 financial crisis. As an investor or trader, it can be pretty scary but at the same time, somewhat exciting. This is a story you’ll tell your grandkids someday.
Just to give everyone a bit of context and background on what’s happening with the markets now: Monday, March 16 was the 3rd time in a week that the US markets were stopped for trading due to them losing too much.
This is unprecedented in US markets history. The last time trading was halted in the markets? The week of 9/11 terrorist attacks, when the New York Stock Exchange and other markets were stopped for a week. That was 2001, nearly 20 years ago.
Indeed, you don’t even have to look too far away to see how much this is affecting the financial markets. That same Monday, our Philippine Stock Exchange (PSE) announced that it would stop trading “indefinitely.”
We were the first country in the world to stop our stock market due to the coronavirus. Our stock market eventually opened again, Thursday.
Back to the US markets, the Dow Jones Industrial Average (DJIA), consisting of 30 blue-chip companies with consistent and predictable earnings like Microsoft and McDonald’s, had its worst-ever loss on a points basis and lost -12.93%. This was the 2nd worst decline percentage wise in its 100+ year history. The worst was in 1987, 33 years ago.
Other US market indices didn’t fare better too. The S&P500 index dropped off -11.98% and the NASDAQ tumbled -12.32%, its worst decline on record since it was created in 1971.
Again, we are in the midst of history being made here. One that you’ll read in investment books someday.
But some people are still making money…
Despite the volatility and uncertainty of the global markets, there are still 163 Popular Investors in eToro who have been profitable in the last 30 days.
Here’s some of my top picks:
Jay Smith (jaynemesis) who has been trading with eToro since 2014 and has one of the biggest followers in the site. He has 116,594 followers and over 7,000 copiers. He uses a mix of fundamental, technical, and sentimental techniques and rarely uses leverage.
George Thomson (misterg23) has over 10 years of trading experience and has over 30,000 followers and 2,671 copiers in eToro. He’s worked in either Finance or technology firms in his professional career: Revolut, Deloitte Digital, and IBM. According to his profile, his aim is to generate consistent and sustainable long term profits and applying value investing techniques.
Finally, there’s Daniel Collison (OverIt) on the other hand has over 5 years of experience and trades based on market news and trends. He targets 2-3% gains every month for a total compounding gain of 20-30% total. He has 3,031 followers and 413 copiers.
Their performance 2019 – present:
It’s true that there’s always an opportunity to make money in the market, especially where short selling is possible because you can make money through this strategy when prices are going down.
Unfortunately, short selling is not allowed in the Philippine Stock Exchange. Well, at least not yet. But it is allowed in the forex market, in the US market, and in stock exchanges of other countries as well.
And if you are an active trader in global markets, then you’ve probably been short selling securities for the past several weeks and making money from it.
If not, then you can try by opening a FREE Practice Account in eToro.
But wait there’s more…
You don’t really have to watch the global markets to make money from it because in eToro, you can just do CopyTrading and your account will automatically copy what another investor or trader is doing, and potentially creating for you a passive income source.
And of course, during these volatile markets, you can copy those three above, or you can go around the platform and pick any of the Featured Investors there.
So, the key takeaway here is: If you are afraid of the markets, don’t be! Despite the volatile markets, there are still opportunities abound, and if you don’t know where to start… just copy an expert! The first step is to open an eToro account.
Sign-up with eToro HERE. Instantly get a FREE $100,000 practice account.
Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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This was part of an add in my inbox: “Bull or bear, “Smart Money” doesn’t care.” There is a lot of truth in that statement. Smart money looks for the signs that trouble is brewing in the economy and the markets in general. This time the signs were there and the trigger event was the COVID-19 scare. Some investors sell and move to cash, waiting to pounce on bargains when the bear retreats. When the Philippine stock market matures, there will be new products available such as options and inverse ETFs. We like to say that when you trade options, you have options and this is also very true. You can purchase puts (a married put trade with long stock) for downside protection and also to speculate on a down move. You can sell call options for income that also offer a small amount of downside protection from the income you receive. You may also do what we call a “collar trade” where you sell a call option and use some or all of the money to purchase put protection on your long stock. You get your put protection at a reduced cost or maybe even for free. None of this requires outright shorting of stock witch is not all that easy to do. At many brokerage firms you will see a notation that many stocks are “hard to borrow.” That will increase your cost not to mention the high margin requirement to short a stock. In fact, we are NOT allowed to short stock in our US retirement accounts, only in a margin account.Then, there are inverse ETFs. Inverse ETFs go up as the market crashes. There are even 2X and 3X leveraged ETFs for those with enough experience to use them wisely. Finally, many sophisticated investors will place money into bonds as a safe haven in rough markets. For a current example, take a look at TLT, the long term US Government bond ETF. That bad boy went parabolic recently as the stock market tanked but as today’s chart shows, it has tapered off as the market hysteria cooled off. So YES, it is entirely possible to make money in up, down and sideways markets.