Using Volatility for Investment Gains

It’s hard to think of a more uncertain time in Australia’s history than right now.

Australia has just become the proverbial ship without a rudder. There’s no clear majority in Parliament. And vote counting might not finish for another few days — leaving the final results of the election up in the air.

What we do know is that, once again, the Aussie public has had to choose between Tweedledumb and Tweedledumber (you can decide who’s who for yourself). As a result…there is no result.

And the UK is even worse off. Having voted themselves out of Europe, they’re disliked and distrusted by their neighbours, and now both the sitting government and the opposition find themselves leaderless.

Who would want to captain that leaky boat? Seemingly no one.

But if you think things are messed up in Australia and the UK, at least there’s still the US.

Let’s not mince words here. Trump is a nutter. There’s no two ways about it. But here’s the catch. Unless you think the past 32 years have gone swimmingly for global economic growth, political stability and cultural cohesion, Clinton is just as bad…or worse.

Here’s something interesting…

In 1989 George H. W. Bush became US president. He served until 1993 when he was succeed by Bill Clinton. Intern-friendly Bill ran the show until 2001, when he was replaced by a fella with a familiar surname. George W. Bush ran the US from 2001 until 2009. Barack Obama has been in charge ever since, with none other than Hilary Clinton serving as Secretary of State from 2009–2013.

Now, it’s quite possible that, by the end of this year, until 2020, President Hillary Clinton will take over as the most powerful person on the planet.

If she does get in, and remains in office through 2020, it would mean the Bush’s and the Clintons will have held office for 24 of the preceding 32 years. That’s quite a dynasty for a country that rejected the monarchy two centuries ago.

In short, the US is wrapped up in its own state of political insanity.

Then you’ve got China trying to blend communism with free markets and consumerism, Russia with a madman at the helm, and a European Union on the verge of falling apart.

Uncertainty doesn’t even begin to define today’s global scene.

Now, these serious sovereign problems are going to cause an incredible amount of volatility on global stock markets. Much of this will play out on the ASX, as volatility and wild swings in investor sentiment shake the market all over the place.

Volatility in the Stock Market

When it comes to small-caps on the ASX, you can expect this effect to magnify many times over. You’ll likely find that double-digit daily swings become the norm.

It means that small-cap investors better be prepared for a wild ride — at least over the next year, possibly even several years after that. Don’t expect the overall ASX to climb towards record levels. With all that’s going on in the world, we don’t see the ASX All-Ords heading past 6000 points any time before 2020.

But that doesn’t mean you won’t find big returns on the market. In fact, quite the opposite.

While the overall market flounders with uncertainty and risk, the small-cap sector should benefit. Volatility can create opportunities where nimble and prepared investors can bounce in and out of a stock in a matter of weeks — or even days, in the right situation.

My research right now is focusing on stocks that should benefit from this current volatility. Stocks that can provide big short term rewards in a market which, from the outside, might seem to be battling.

These stocks aren’t long termers. I don’t expect to recommend that my readers hang onto them for months or years, like most of the recommendations in my premium publication, Australian Small-Cap Investigator. In fact, they might bounce in and out of the portfolio in a matter of days. It’s a slight departure from our usual longer term horizon.

But right now, with current market conditions, I think the volatile small-cap stocks I’m looking at are perfect to provide the returns that my readers have come to expect.

And, if I’m right, we’ll realise those gains in an even shorter space of time.

It’s not a low risk-free strategy, but investing never is. And with the volatility and uncertainty plaguing the world today, what would you prefer? To dwell on doom and gloom, or to chase potentially explosive gains in the small-cap sector?


Sam Volkering is an Editor for Money Morning and is small-cap, cryptocurrency and technology expert.

He’s not interested in boring blue chip stocks. He’s after explosive investments; companies whose shares trade for cents on the dollar, cryptocurrencies that can deliver life-changing returns. He looks for the ‘edge of the bell curve’ opportunities that are often shunned by those in the financial services industry.

If you’d like to learn about the specific investments Sam is recommending in either small-cap stocks or cryptocurrencies, take a 30-day trial of his small-cap investment advisory Australian Small-Cap Investigator here, or a 30-day trial of his industry leading cryptocurrency service, Sam Volkering’s Secret Crypto Network here.

But that’s not where Sam’s talents end. Sam specialises in finding new, cutting edge tech and translating that research into how the future will look — and where the opportunities lie. It’s his job to trawl the world to find, analyse, research and recommend investments in the world’s most revolutionary companies.

He recommends the best ones he finds in his premium investment service, Revolutionary Tech Investor. Sam goes to the lengths of the globe and works 24/7 to get these opportunities to you before the mainstream catches on. Click here to take a 30-day no-obligation trial of Revolutionary Tech Investor today.

Websites and financial e-letters Sam writes for:

Money Morning Australia