Today, we have a rare opportunity to invest in a bear market.
Admittedly, I use the term “invest” lightly…it’s actually more of a trade by definition.
And while you might be gun-shy about the very idea, I’m here to tell you that this same “investment” has worked 100% of the time (7 times out of 7) over the past year.
But before I reveal this opportunity, I want to clarify WHY you should seek out bear markets for your investment capital.
History has shown that the greatest investment opportunities occur during bear markets.
Think about that for a second. It probably runs counter to how you’ve invested in the past. Most investors sell during bear markets and buy during bull markets.
That’s because, unfortunately, most investors aren’t capable of dealing with the emotional rollercoaster that a bear market brings. Bear markets, particularly the bottoms, are extremely volatile . . . and very few investors have the patience, conviction and fortitude to persevere through volatility.
Most investors prefer to stick with the herd, buying into the latest bubble. And statistics don’t lie. Those same investors are the ones who always get caught when the bubble pops. Tech investors, real estate and gold investors come to mind.
In contrast, the few traders who can survive the volatility of bear market bottoms become the wealthy investors of tomorrow. Just ask Warren Buffett, George Soros, Carl Icahn, James Rogers, etc.
Warren Buffett said it best: “Be fearful when others are greedy and greedy when others are fearful.”
His philosophy is timelessly profound and can be applied in any market. During times of heightened fear, the best bargains can be found. This is where the seeds are planted.
Investors follow Buffett’s lead every year when they buy the worst-performing stocks of the Dow, otherwise known as the Dogs of the Dow.
The question is this: Do YOU have the stomach to invest in gold?
If so, I would like to introduce you to one of the best opportunities over the past several years:
Yes, we all know the story of gold and its monumental demise, but the Gold Miners (NYSE: GDX) have been hit even harder recently… creating a truly rare opportunity for quick profits.
There are several ways to attack the bear market in the miners. First you could just buy the Market Vectors Junior Gold Miners ETF (NYSE: GDX). It’s the easiest way to gain exposure to the sector and invest in gold, but there will be an opportunity cost associated with the move unless you time things perfectly, which rarely happens in the world of investing.
Or you could use the strategy I use within my High Yield Trader portfolio: sell puts.
Through selling puts you are able to collect income while setting the price you would like to buy shares.
I’ve been doing this since May of last year in GDX and have made a staggering 52.1% in locked-in income while the underlying ETF has lost 19.4%. And the best part about it is that I haven’t even had to buy any shares of the ETF.
It’s a simple strategy that is extremely powerful in bear markets. Because when fears rise, the prices of options rise and we are able to sell puts for significantly higher prices.
We are able to sell puts every month and collect roughly 5.0% on our capital until the underlying investment moves below the price we are willing to buy the ETF. Once we have the position, we take on the buy-and-hold mentality and wait for the profits to appear.
Andy Crowder hosted another one of his highly popular options webinars – a special summer edition. The summer is traditionally the worst six months for individual investors. For Andy, it’s Christmas. In yesterday’s webinar, “Sell In May – Make it Pay,” Andy revealed his easy, step-by-step process for using simple options trades to consistently make 15% a month during the dog days of summer. He also offered some exclusive trade recommendations and answered listener questions. Click here for a full replay of Andy’s webinar.