How To Face Down a Market Pullback and Win

[The Bleeding Edge]( How To Face Down a Market Pullback and Win By Jason Bodner, Editor, Outlier Investor I was exhausted. Staring at my screens, I saw a sea of red. Almost every stock was down. A lot. Volatile market days are particularly busy for options traders, which is what I was back then. I was head of Equity Derivatives North America for Cantor Fitzgerald. It was the summer of 2008, and saying it was volatile was an understatement. The S&P 500 had already fallen 15% for the year. Little did I know that it would go on to fall 57.69% from the peak to its trough on March 6, 2009. But that July day, the market felt heavy to me. There was endless bad news, and my personal portfolios were getting mauled. Shifting markets meant I was busier than usual. But it wasn’t fun. People weren’t only getting hurt – they were getting taken out. [U.S. Treasury Secretary Mark Zuckerberg?]( Each day, I was spent before I even left for work. Stress was crushing. Amid the chaos, I called a client to ask him how he was doing. Imagine the pressure of managing billions of dollars. On any given day, he could be losing tens of millions. But somehow he always seemed happy. “How are you, John?” I asked carefully. “I’m great – never better,” he said enthusiastically. “Are we on the same planet?!” I asked. “I’m looking at market futures down 2%!” Unfazed, he said, “Yep. Jason – stocks go up, and stocks go down. Today, they’re down.” He sounded like a fortune cookie. What struck me, though, was how calm and relaxed he was. It was almost like he was in a good mood. He gave me a limit order to buy stock – but well below the premarket price. In fact, John constantly placed orders well outside the trading ranges. His orders were rarely executed quickly – which was frustrating for someone like me who worked on commission. Recommended Link [*WARNING: 234 million Americans have savings at risk]( [image]( On March 12, the US government made it legal for your bank to hold zero dollars in reserve. Does that sound safe to you? Well, it gets worse… Right now, US banks pay a measly .06% interest on your hard-earned savings. With official inflation already over 5%… that’s a good way to lose money. Which is why millions of Americans are now looking to invest some savings in new “Tech Royalty” accounts. Where you can collect yields as high as 8%… 12%… even 17% - or more. Plus, there’s a special feature that makes some “Tech Royalties” return as much as 3,639%… 4,646%… and even 15,911%. It sounds impossible… But it’s true.. [Click here to learn more.]( When I asked him why he did that, he gave another confounding fortune cookie answer: “Patience and process.” Then, on a really ugly day, the market sank nauseatingly hard. Other clients freaked out, but John was his usual sanguine self. In fact, he was giddy. Many of his buy orders were suddenly getting filled. His “patience and process” mantra paid off handsomely. When stocks eventually bounced, his lowball purchases looked like all-star returns. Of course, John’s lesson of patience and process is simple to understand… but difficult to follow. Patience means waiting for the right setup. Like baseball, we need to just wait for the pitch instead of chasing a trade. Process means unwavering and unemotional dedication to our strategy. In John’s case, he wanted to buy great companies at discounts. It meant infrequent action but big potential payoffs. What mattered was he was fully committed. Here’s why I’m telling you this now: Volatility is here. And I expect it will continue for a bit. To be clear, I’m not talking about anything nearly as bad as the 2008–09 financial crisis. But I do see storm clouds for the near future. And today, I’ll show how we can put patience and process to work for us now. Recommended Link [How $60 Could Make You a Real Estate Mogul]( [image]( Thanks to a new technology Wired calls “A Gold Rush” – anyone with $60 in their pocket can become a landlord (potentially a rich one)… with a few taps on their smartphone. Fortune reports regular folks can now “play tycoon & buy a part of a condo or iconic building.” Tech genius Jeff Brown says he’s uncovered a way for average investors to play this landlord “loophole” with just $25. [Watch the Full Story Here.]( -- The Data Is Deteriorating Hello, I’m Jason Bodner, the editor of Outlier Investor. I spent nearly two decades on Wall Street learning the ins and outs of the financial world. And now, I bring all of my hard-earned expertise to Brownstone Research as I work alongside Jeff Brown. I use my insider’s knowledge to help regular investors take advantage of Wall Street’s hidden moves. Oftentimes, what appears on the surface isn’t what’s really going on among the big institutional players. [[URGENT] MAJOR BUY ALERT]( And right now is a perfect example of the disconnect… Outwardly, markets look great. The main indexes are chugging higher. Casually looking at charts of the Dow Jones Industrial Average ETF Trust (DIA), the S&P 500 ETF Trust (SPY), and the Invesco QQQ Trust Series I (QQQ), an investor might think the weather is fine. [Click to Enlarge]( All three indexes are at highs, and their related ETFs are even seeing fresh Big Money buying. Nothing to worry about… right? But data underneath is deteriorating. Let’s overlay the Big Money Index (BMI) on the SPY chart. The BMI is a 25-day moving average of all unusual institutional buying and selling of stocks. When it trends higher, markets follow. When it drops, the 30-year history suggests markets will follow soon after. And it’s dropping hard. Take a look… This tells us that one of three conditions is going on: - Buying is dwindling - Selling is increasing - Both Right now, we’re seeing both – increased selling with decreased buying. So can we assume that a pullback is around the corner? Let’s continue looking beneath the market’s glossy veneer for an answer… Looking at the small-cap-loaded Russell 2000 Index ETF (IWM) offers another clue. It can’t keep up with the other indexes and has been struggling almost all year: That’s another indication something might be amiss. Instead, the market right now is being propped up by some big stocks – look at Microsoft, Apple, and Google as examples. Only a handful of great quality companies are doing the market’s heavy lifting. Large-cap tech, industrials, and banks have been rising lately, whereas China, small-cap growth (including biotech), and gold have been getting hit. Investors are clearly selling growth in favor of old reliable big-cap tech and infrastructure beneficiaries. And, of course, all of this is happening while we historically expect mixed returns. As I wrote [last month]( July and August offered a paltry average gain of 0.41% over the past 25 years. This period ends up in the red nearly as much as it does the green. I believe signs point to a correction in the near future. So as investors, what should we do? Recommended Link [The Most Controversial Tech Video You’ll Watch in 2021?]( [image]( Everyone’s glued to big tech stories these days. Yet they’ve all missed the biggest of all. Not surprising. No one else is talking about what you’ll see in this video. Even before you put another penny into another tech stock, you'll want to watch this video first. [Click here for full details.]( -- How To Play a Market Pullback In times like these, patience and process take effort… but also pays off. As investors, we shouldn’t worry about the coming storm clouds. In fact, should a pullback come, we should see it as a discount opportunity. I’d be building my stock wish list right now. Then if any dips arrive, we’ll be ready to buy – just like John was back in 2009. Personally, I’ll want to snap up high-quality growth and tech stocks that have been out of favor the past few weeks. For a broader opportunity, right now the Russell 2000 Index ETF (IWM) is discounted compared to the rest of the market. Of the four main indexes, it offers the best value, which means it could be an excellent buy in case of an overall pullback. Of course, if anyone wants to know which specific stocks I’ll target in the event of a sell-off – the ones I think are the outliers of tomorrow – [check out more information here](. Ultimately, let’s remember to keep the right mindset when faced with difficult markets. During the collapse in 2008, John was cool as a cucumber. That’s why, near the Great Financial Crisis’ demoralizing low, I adopted John’s mantra. From then on to this day, I say patience and process. Talk soon, Jason Bodner Editor, Outlier Investor --------------------------------------------------------------- Like what you’re reading? Send your thoughts to feedback@brownstoneresearch.com. --------------------------------------------------------------- In Case You Missed It… [Jeff Clark has done the impossible]( He’s found a way to take a seemingly boring stock… and use it to potentially generate thousands – or even tens of thousands of dollars – EVERY MONTH… Without doing anything crazy or complicated. Check out the details right [here]( – including the name and ticker of this stock. [Click here.]( [image]( --------------------------------------------------------------- Get Instant Access Click to read these free reports and automatically sign up for daily research. [image]( [The Gold Investor’s Guide]( [image]( [How to Earn Free Bitcoin]( [image]( [The Trader’s Guide to Technical Analysis]( [Brownstone Research]( Brownstone Research 55 NE 5th Avenue, Delray Beach, FL 33483 [www.brownstoneresearch.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Brownstone Research welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-888-512-0726, Mon–Fri, 9am–7pm ET, or email us [here](mailto:memberservices@brownstoneresearch.com). © 2021 Brownstone Research. All rights reserved. Any reproduction, copying, or redistribution of our content, in whole or in part, is prohibited without written permission from Brownstone Research. [Privacy Policy]( | [Terms of Use](