Last week, President Trump continued his trade warpath… And the biggest victim was the stock market.

On Thursday, the president jumped on his favorite platform, Twitter, and announced…

In a separate written statement, Trump claimed that the tariff will escalate by 5 percentage points each month until “the Illegal Immigration problem is remedied,” at which time it will be removed. Trump said the tariff could reach 25% by October 1.

The markets, already jittery from Trump’s trade war spat with China, didn’t take too kindly to the tweet. The S&P 500 fell as much as 1.3% on Friday. Not to be outdone, the Dow dropped 1.4% and the tech-heavy Nasdaq plunged 1.6%, following the president’s latest trade threats.

After complaining for years about the U.S. trade deficit with China, President Trump imposed tariffs on hundreds of billions of dollars worth of Chinese goods.

Now, he’s turning his ire, once again, to Mexico. But it’s investors who are feeling the pain. After gunning up nearly 20% to start the year, the S&P 500 has given back nearly half those gains since trade war tensions with China flared up again last month.

Many of our readers are concerned… so I reached out to our PBRG gurus to find out what you should do to protect your portfolio from this recent bout of volatility…

World-Renowned Cryptocurrency Expert

On January 1, 2019, former hedge fund manager and Wall Street executive Teeka Tiwari warned Daily readers that the escalating trade war tensions could slow down the economy and urged caution.

That’s why he and his Palm Beach Letter team introduced defensive strategies to their portfolios earlier this year… including investing in untouchable stocks, collectibles such as classic cars, and even real estate crowd funding.

And it’s made a difference. Year-to-date, the Palm Beach Letter portfolio has outperformed the S&P 500 23.2% to 10.8%.

If you follow us regularly, you also know Teeka’s famously “doubled-down” on cryptos in April 2019, when skeptics were declaring bitcoin dead.

Bitcoin is now the best-performing asset class of the year. And studies suggest adding crypto assets to your portfolio can improve your risk-adjusted returns.

While Teeka still loves stocks, he sees more opportunities ahead in alternative assets.

Here’s T:

The trade war is temporary but the market will likely panic and price equities as if the trade war is permanent. So in the short term, we’re going lower. However, once the market realizes the trade war isn’t permanent… it will reprice equities higher.

I don’t know how long this will take, but the S&P 500 could drop to 2,600 before the selling is over. Right now, I’m looking at hedged assets or alternative assets that provide income.

To protect your portfolio from trade war fire, Teeka recommends you diversify your assets.

In the meantime, he says investors should stay rational, get defensive, and use the pullback as a buying opportunity.

Wall Street Insider

Like Teeka, our Wall Street insider Jason Bodner sees near-term weakness in the stock market.

As a former top trader for prestigious investment firms like Cantor Fitzgerald, Jason frequently moved over a billion dollars per minute. And that experience helped him develop a highly accurate stock-picking system that tracks where big institutions are likely moving their money.

It not only predicted the sell-off in February 2018 and the rally we saw at the start of this year… but even President Trump’s epic political upset in the 2016 election, too.

So when we want to know what the “smart money” is doing, we turn to Jason’s system.

Right now, we’ve seen many institutions selling over the past three weeks. Exchange-traded fund (ETF) selling is picking up, too. However, we haven’t seen “forced selling” yet… but should soon.

Rest assured, though. The market will likely bounce once it’s oversold. Now is the time to start thinking about Christmas in June. So get out the shopping list of great stocks that you missed out on in the run-up this year.

Jason’s advice: “A wise man once said, ‘great stocks bounce like fresh tennis balls.’”

Stealth-Income Generator

And finally, we turn to our stealth-income generator, William Mikula.

William is chief analyst of Teeka Tiwari’s Alpha Edge. And since 2012, he’s closed 294 out of 302 trades for a profit. That’s a 97.4% win rate. (That’s why we call him our “stealth-income generator.”)

William views market volatility like a pig views a mud puddle.

He uses the CBOE Volatility Index (VIX)—known as the market’s “fear gauge”—to measure investor sentiment. When the VIX gets above 20, that’s his time to strike. And on Friday, the VIX spiked over 11% following President Trump’s tweets.

With the VIX approaching 20, it’s definitely a great time to make low-ball offers (selling put options) on quality companies. And we’re sharpening our knives and getting ready to pounce.

You see, when volatility spikes, investors will pay William huge premiums for agreeing to “insure” their shares. So he makes upfront cash through low-ball offers (selling put options) to buy these shares if they fall further.

And since William gets paid at the outset, he doesn’t need the stock to go higher right away to profit. This allows him to be patient with trades—which most investors aren’t.

Three Steps You Can Take Now

With the trade war ratcheting up, many investors are panicking. That’s because they don’t have a plan. But at Palm Beach Research Group, we’re always prepared.

So what can you do now?

• Get defensive. Consider diversifying alternative assets such as cryptos, collectibles, and real estate. They can lower your portfolio’s overall volatility and increase your risk-adjusted returns.

• Get your shopping list ready. The pullback will be a great opportunity to buy the best stocks on sale.

• Get out your knives. When the fear gauge pops, investors panic. And you can generate income making low-ball offers on quality companies selling at discounts.

Most importantly, stay calm and rational. Even if the trade war continues to heat up, you’ll weather the storm as long as you have a plan.

Regards,

Nick Rokke
Analyst, The Palm Beach Daily

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Sincerely yours Palm Beach Reseach Group