Finding Opportunity
in Market Volatility
Common Sense Strategies for Turbulent Markets
 I’ve
been in the investment industry for 25 years and with Weiss — for over
18 years. My passion and vocation is guiding investors to help grow and
protect their wealth.
I
readily admit these last few months have been the toughest of my career
— and this includes my first-hand experience of the 1987 crash, and the
tech wreck bear market of 2000–2002.
None of those events come close to the harsh realities we’re facing today…
- A horrendous housing bust and mortgage meltdown...
- The biggest crash in financial markets since the Great Depression...
- The largest government stimulus package the world has ever known...
- The collapse of some of the oldest investment firms on Wall Street.
Facing
this unprecedented economic turmoil, every decision you make today will
be vital to protecting your personal wealth tomorrow. Our investment
team at Weiss Capital Management is sensitive to this fact. Taking into
account your individual needs and risk tolerances, we offer our best
investment analysis and most practical insights to help you prepare,
protect and potentially grow your wealth through this difficult period.
Today,
I’d like to brief you about one of our investment strategies that can
turn swings (both UP and DOWN) — in stocks, bonds, even commodities —
into potential wealth-building opportunities for you.
In other words: A strategy designed to potentially profit from intense market volatility!
Unfortunately,
the current bear market has produced many painful comparisons to the
Great Depression of the 1930s — a period of prolonged pain for the U.S.
economy and financial markets. For instance, the sharp decline in the
Dow Jones Industrial Average this year is on pace to be the WORST year
since 1931![I]
I
recognize these historical comparisons are painful to consider when
it’s your hard-earned wealth that’s on the line. But it is critically
important to understand the magnitude of this historic bear market, so
you can be prepared for what may come next. The graph below says it
all...
Highest Stock Market Volatility in HISTORY
What’s
interesting to note is that volatility in the S&P 500 Index this
year has reached its highest level EVER recorded. This includes
gyrations in BOTH directions. The graph above shows the average daily percentage swings in the S&P 500 Index — both UP and Down — over the past 50-trading days. That’s about 10-weeks’ worth of price changes.
As you can see, the average daily price change in stocks recently topped 4%. This market instability is nearly DOUBLE the level seen in the last bear market — from 2000 to 2002. It is even more intense than the 1987 stock market CRASH. In fact, volatility in 2008 has even exceeded the extreme levels seen during the stock market CRASH of 1929 — and the Great Depression that followed in the early 1930s![II]
For
certain investors, such a volatile climate offers substantial
opportunity to utilize an investment strategy offering the ability to
HEDGE against today’s turbulent markets. That’s because a well-hedged investment strategy — including both LONG and SHORT positions — can help you turn today’s market instability to your advantage, rather than have you become a victim of it.
In other words, you can turn volatility into potential wealth-building opportunities.
Let me explain further...
INVERSE ETFs: Can Provide a Hedge
Against More Downside Instability
In the past, hedging your investments was complicated.
You
could sell short individual stocks, or use stock index futures or
options contracts to reduce your risk and protect your investment
holdings.
The
trouble is — using these tools takes a lot of experience and effort —
watching every tick of the markets. Plus, you could expose yourself to
unlimited risk using such exotic hedging strategies.
Today,
however, there’s a much more “user-friendly” investment vehicle that’s
easier to trade and without the risks that come from shorting
individual stocks or speculating in options.
I’m talking about a type of exchange traded fund known as INVERSE ETFs.
Many
inverse ETFs have been introduced over the past several years that
track stock, bond and commodity indexes and market sectors — BUT in the OPPOSITE direction than these markets are moving.
For
example, an inverse S&P 500 Index ETF is designed to go UP in value
when stocks go DOWN...an inverse commodity ETF should GAIN in
price when commodities like oil, copper or corn LOSE ground... you get
the picture. But here’s the important part: inverse ETFs can be a
valuable tool for today’s turbulent market environment!
At times like this, inverse ETFs are especially important — because they offer you the opportunity to potentially earn profits when a particular market index or sector is losing value.
At Weiss Capital Management, our mission is twofold: To help you protect your wealth and to help you keep your money growing even in the most challenging investing environments.
Not
all of our investment programs are a good fit for every investor. Some
may be too aggressive, and others too conservative, for your particular
needs. But if you aren’t sure what approach is best for your
investments, our financial advisors are skilled at helping determine
the best mix of investments to suit your individual needs.
For
some investors, such as many retirees and the most risk averse — the
best advice is to stay safe. But, for others, with longer-term time
horizons and those who are willing to take on some risk, there are
investment strategies worth considering even with today’s market
conditions.
Right
now, nearly every client I talk to has the same concern in mind: Where
will markets go from here? Here’s the problem: You can’t know for sure
how much longer financial markets will remain under stress...or how low
stocks could go. There’s already an abundance of bad-news reflected in
today’s share prices, so perhaps there will be a sharp rebound rally
first, followed by more downside ahead in the market. There’s just no
way to say for sure.
But
one thing is crystal clear to us: It’s best to be prepared for
unprecedented volatility to continue into 2009. Financial markets are
likely to remain turbulent as continued drag from the housing and
financial crisis pushes our economy deeper into recession.
But
instead of sitting on the sidelines — or trying to ride-it-out with
your current investments — you can position yourself to potentially
profit from increased volatility.
The Weiss ETF Sector Rotation: Concentrated Program Aims to Profit in BOTH Rising
and Falling Markets
Several years ago, Weiss Capital Management developed an investment strategy with the ability to go both LONG and SHORT the market depending on rapidly changing market conditions.
The WCM Sector Series ETF Sector Rotation: Concentrated Program
strives to maximize investment returns through all market cycles:
uptrends, downtrends and markets that are trendless...drifting with no
clear direction.
At
Weiss Capital Management, we use a proprietary quantitative model
designed by the program’s manager, Dan Ascani. The goal is to
outperform the benchmark S&P 500 Index over time, regardless of the
overall market direction. Of course there’s no assurance this program
can achieve its goal; as with any aggressive strategy, the program
carries a greater degree of risk and may not be suitable for every
investor. However, the ETF Concentrated Program’s sector rotation
trading strategy is designed to invest your money in the right area of
the markets at every stage of the market cycle.
To
achieve this strategy, the ETF Sector Rotation: Concentrated Program
typically holds a limited number of ETFs — those that are judged most
likely to outperform the overall market. As part of this strategy, the
portfolio manager relies on directional market indicators to help
determine the most favorable time to be long or short...
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When the quantitative model signals that a rising market trend is likely, the program goes LONG... buying traditional ETFs that offer the BEST upside profit potential in a rising market... |
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When the quantitative model signals that a falling market trend is likely, the program goes SHORT... buying inverse ETFs that are designed to RISE in value as markets FALL. |
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In
a trendless market — with no clear direction either up or down — the
Weiss ETF Sector Rotation: Concentrated Program typically stays in the
relative safety of cash by investing in the Weiss Treasury Only Money Market Fund*. |
As
with any investment strategy, there can be no assurance that this
program will achieve its objective in the future, but if you’re an
aggressive investor with $250,000 or more to invest, you should
consider the Weiss ETF Sector Rotation: Concentrated Program — especially in today’s volatile market climate — for several key reasons:
 This
program is designed as an active trading strategy, using both
traditional AND inverse ETFs to target maximum returns whether markets
are sinking or soaring in value.
 The
program holds a limited number of ETFs, which, in our opinion, may
improve the likelihood of outperforming the benchmark S&P 500 Index
over the long term.
 The sector-rotation strategy we use is designed to overweight sector or index ETFs that appear most likely to out-perform, to take advantage of changing market sentiments.
For
more detailed information about the Weiss ETF Sector Rotation:
Concentrated Program, including full performance and recent portfolio
commentary, please click on the link below and request your
complimentary ETF Sector Rotation Investor’s Kit at no further obligation.
For
even faster service, we invite you to contact a Weiss Capital
Management financial advisor right away by calling: 800.814.3045.
Best wishes,
Sharon A. Daniels
President
Weiss Capital Management, Inc.
P.S. Don’t suffer whip-lash
from trading in today’s volatile markets. Instead, leave the driving to
us and potentially turn market volatility to your advantage. Send for
your ETF Sector Rotation Investor Kit right away: Just go here!
[I]Morgan Stanley Global Economic Forum: “A Deeper Slump Triggers Aggressive Policy Responses”, 12/11/08
[II]Bespoke Investment Group blog: “The Volatility Bubble – Average Daily Changes Now Above 4%!”, 12/9/08
Disclaimers and Disclosures
*The
ETF Sector Rotation: Concentrated Program utilizes the Weiss Treasury
Only Money Market Fund, which Weiss Capital Management, Inc., or its
affiliates provide advisory, administrative, distribution and other
services, and receive compensation.
The
Weiss Treasury Only Money Market Fund is offered and sold to persons
residing in the United States and is offered by prospectus only. Read the prospectus carefully before you invest or send money
as it contains a complete description of the Fund’s investment
objective as well as all charges, expenses and an assessment of risk,
all of which should be considered carefully before investing. To obtain
a prospectus, as well as new-account forms, please contact Weiss
Capital Securities, distributor for the Weiss Treasury Only Money
Market Fund, at 800.242.8092 or visit the Fund’s website at www.WeissFund.com or send an email to AskUs@WeissCS.com.
The Weiss Treasury Only Money Market Fund is distributed by Weiss Capital Securities, Inc., member FINRA (www.FINRA.org) & SIPC (www.SIPC.org).
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