Uncertain Markets? Have No Fear

“A time to gain, a time to lose.” True words sung by The Byrds.

Elections are on the horizon and politics, whether we like it or not, affects wall street. Election years experience higher levels of volatility and that’s normal. Both political parties will have different ideas about where they would prefer to spend money and wall street will try to follow that money.

Adding to the overall level of uncertainty is the looming Fed decision set to take place September 17th. The Fed is going decide to cut rates or not, and if so, to what extent. Some heavy hitting market analysts were predicting the Fed would cut rates as early as back in march of this year. Each time the Fed decides whether to alter their rates or keep them the same, we see some movement in the market.

Let’s not forget about tech. The tech sector has seen a staggering run over the last 18 months. Leading the charge, has been NVDA. NVDA has lead the tech gains and has outperformed their competition as well as the overall market. Their performance has helped bolster both the S+P 500 and the Nasdaq. Simply put, tech has been the strongest sector in the American economy and as the tech sector pulls back, it will have a direct impact on our current economy.

Though NVDA just posted strong earnings, and a good forecast, we are seeing the shares dip. This has been due to overall market uncertainty, and the fact that many believe for the stock to double or better, the company would have to be posting significantly higher forecast numbers. Simply put, there is a belief that the company is so large that the days of 200% years, of which NVDA has had many, may be drying up. Some just think that now is a great time to take profits before the elections. If you had bought NVDA pre split just a few months ago, you could’ve had a nice 30% return in just 60 days. However if you bought them last year you could be anywhere from 100% to 200% in profit.

So possible tech pullback, looming Fed rates, and elections, what are you to do? Well my Savvy investors, my answer comes in a few forms. For your long term investments like a 401K, it might not be a bad idea to move your money out a market fund and into something safer like a government fund. In fact, if you are a casual investor who doesn’t check on your investments often, it might not be a bad time to cash out of some of your positions or scale back. Simply reducing risk and minimizing losses during hard years can help you grow at an exponential rate compared to the average American that doesn’t manage or track their 401k’s through the ups and downs.

However this In The Pitt Investments! You don’t just come here to protect yourselves during times of uncertainty, you look for the ways to thrive in them. So how do savvy investors profit during the down times? You look for the opportunities, and i have two for you now. Tech has been sliding recently so lets start there. The QQQ fund tracks tech, and because tech has done extremely well over the years, so has QQQ. SQQQ is a fund that shorts tech, it has historically not done well. If you put 100 dollars in SQQQ 5 years ago, you wouldn’t be able to afford a coffee with the returns today. However if tech pulls back, the SQQQ will grow as a result. This will most likely not last long so I advise you to maximize on this while the trend lasts. Call options on the SQQQ are very cheap. You could buy a call lasting until December for around 200 dollars. If you bought this call yesterday you would’ve made 30 percent today alone as tech pulled back, if you bought Monday you would have net a solid 70% this week. Another fund you can profit on today is the Vix or volatility index. The volatility index tracks market volatility, when there is market uncertainty or issues in our economy, the Vix rises. Call options on the Vix are also very cheap. Again if you had bought Call options a week ago you would be at nearly 80% gain in a week. I predict as we get closer to elections we will see more volatility thus there will be more chances to make money this way. My Savvy investors, it is up to you to decide how you want to invest. You could do nothing as many do, you could move your assets out of the market or you could find opportunities to continue to make money.

As a disclaimer, I personally do have stock in NVDA as well as i do have call options on both the Vix and SQQQ.