| DAILY ISSUE Hello, Reader. Over the course of human evolution, we Homo sapiens have developed a survival instinct called the “negativity bias.” This rather pessimistic term refers to the theory that negative events impact us more significantly than positive or neutral events, even if the positive or neutral events far outweigh the negative ones. As early humans, this trait served us well. Our ancestors faced greater immediate dangers, like predators and environmental hazards. We can all agree that when confronted with a woolly mammoth, you’d want to consider every dire outcome. So, prioritizing negative stimuli provided an evolutionary advantage. As modern humans, though, this cognitive bias can cause a lot of mental turmoil. Especially since our current president is the master of creating dizzying headlines. Truth be told, I believe that “headline risk,” is probably the most significant new risk investors will face throughout the Trump administration. However, a lot of present-day fear is grounded in reality. Yesterday, President Trump made good on his tariff threats against Mexico, Canada, and China. Citing ineffective border controls (and other grievances), he implemented additional 25% tariffs on imports from our neighbors to the north and south and a 10% additional tariff on imports from China. Canada responded with a package of tariffs on $107 billion worth of goods. China responded by announcing additional tariffs of up to 15% on imports of U.S. farm products such as poultry, chicken, and beef. Mexican President Claudia Sheinbaum condemned the tariffs and said her government would respond soon. Markets began to sell off yesterday as a result of the tariffs. All of the major indices opened sharply lower in the morning. And at one point, they were all down by more than 1%. Now, as investors, it’s important not to let negativity bias get the best of us when the market is volatile. While the headlines may be scary, there’s always a chance that negative events, like the woolly mammoth, will become extinct. So today, I’d like to share the best course of action to take when faced with market volatility… and the best way to hedge against the chaos. | Recommended Link | | | | Since 1900, this market pattern has only appeared two other times. Once in 1925… once in 1996… and according to our data… once more as we speak. History tells us to prepare — quickly. This market event could transform everyone’s wealth, for better or worse, in 2025. Take this blueprint before it’s too late. |  | | Stay Steadfast Brian Hunt, the CEO here at InvestorPlace, puts it well… Our instincts make us pay close attention to potential dangers… both real and imagined. So, our subconscious minds compel us to click on bearish headlines, fixate on disasters, worry about elections, buy magazines with gloomy forecasts on their covers, and fret over 15% stock market corrections. I encourage you to let common sense and the facts shape your actions instead of leaving it up to caveman thinking. You’ll be far more successful investor if you do. Why do I say that? And what are the facts? Well, just consider that the stock market has averaged a positive annual return of 10% for the past 100 years. This is because the trend of increasing prosperity that is powered by free markets and free enterprise is one of the strongest trends in human history. And here’s another important fact… During the 20th century, stocks appreciated in value by 1,500,000%. A 1,500,000% return turns every $100 invested into $1.5 million. Of course, the 20th century was fraught with its own turbulence. The Great Depression… World War I and World War II… the Korean War… the Cuban Missile Crisis… the Watergate scandal… the list goes on. However, as Hunt says… Despite all these things, U.S. stocks appreciated in value by 1,500,000% during the 20th century. Despite something bad happening every decade, incredible wealth was created by innovative businesses like The Coca-Cola Co. (KO), Ford Motor Co. (F), Hershey Co. (HSY), Intel Corp. (INTC), General Electric Co. (GE), McDonald’s Corp. (MCD), The Procter & Gamble Co. (PG), Tootsie Roll Industries Inc. ( TR), Pfizer Inc. ( PFE), Walmart Inc. (WMT), Starbucks Corp. (SBUX), and thousands of others. We all know there are problems in America… These topics are covered daily in the news. They are the subjects of best-selling books. They have many people paralyzed by fear. But if you know your history and know how powerful American innovation is, you know this is no cause to sell your stocks and crawl into a hole. John W. Gardner, the Secretary of Health, Education, and Welfare under President Lyndon B. Johnson, once said, “History never looks like history when you are living through it.” But the reality is that history does rhyme, and there is precedent for remaining steadfast in the face of market volatility. So, in agreement with Hunt, I still prefer the wait-and-see approach. In fact, this approach has already worked in the last 24 hours. Trump may soon announce tariff compromise deals with Canada and Mexico. Yesterday, Commerce Secretary Howard Lutnick said, “I think [Trump] is going to work something out with them – it’s not going to be a pause, none of that pause stuff, but I think he’s going to figure out: you do more and I’ll meet you in the middle some way.” Following Lutnick’s remarks, the stock futures tied to all three major averages rose. So, it is important to curb our negativity bias. Protection Against the Unknown That said, if we want to pass by a woolly mammoth unscathed, it’s prudent to have a spear. Likewise, we want our portfolios to offer us the same sense of protection. I believe that gold and gold stocks offer security in the face of uncertainty or market volatility. When the S&P 500 index, the Dow Jones Industrial Average, the Nasdaq Composite, and the Russell 2000 were all in the red yesterday, gold was not. In fact, the futures contract for the price of gold in April 2025 ended the trading day yesterday 0.67% higher… and it is up 0.21% as I write today. Now, I do not recommend “loading the boat” with precious metals. But I do recommend buying them as a hedge against unforeseen financial trauma. In other words, buy scarcity, at least as a hedge. While many investors may rush to buy physical gold or gold stocks, there is a more powerful way to capitalize on this golden hedge – one that multiplies your returns. It’s by using long-term equity anticipation securities (LEAPS), which are long-dated options contracts with expiration dates one to three years away. (Options may sound scary, but they don’t have to be. You can learn more about trading options in my free special broadcast, here.) Every option is identified with a specific stock. And we’ve had major success with a recent LEAPS option on SPDR Gold Shares (GLD), the first U.S.-traded gold ETF. I recommended a LEAPS option on GLD to my Leverage subscribers on March 21, 2024. The call had an expiration date of June 20, 2025. Since then, we’ve sold… - A one-fourth position on April 18, 2024, for a 379% gain…
- A one-fourth position on September 19, 2024, for a 94% gain…
- A one-fourth position on September 20, 2024, for a 110% gain…
- And the final one-fourth position on October 18, 2024, for a 292% gain.
Overall, those who followed my LEAPS strategy in Leverage pocketed a whopping 220% gain on this GLD call. To learn more about this strategy, I’ve created a special presentation that explains how anyone can take advantage of LEAPS. In the broadcast, you’ll also learn how to access a special report that lays out three LEAPS trades with the potential to double your money in just a few months. Click here to learn how to join Leverage and take advantage of this powerful options strategy. Regards, | 
No comments:
Post a Comment