How to Profit From Phase 3 of the Coronavirus Crash
- The market has experienced all kinds of ups and downs over the last two months, entering various phases as investors react to the coronavirus pandemic.
- But, as Alexander Green shares today, there is one proven investment strategy that works in every phase.
Editor’s Note: Concerned about making the right investment choices in today’s volatile markets? Well, Alexander Green is sharing one of his favorite buy signals in this week’s video update – and it’s one that hasn’t just worked well for years, but for decades.
– Christina Grieves, Senior Managing Editor
Over the last two months, the market has experienced three distinct and different phases.
We have only just entered the third one. And it will be the trickiest for investors to navigate.
Yet there’s a proven technique to profit during it, a way to earn back anything you may have lost… and a lot more.
Bestselling author Bill O’Reilly calls it “a fact-based, almost scientific approach to buying stocks.”
This requires a bit of explaining…
With the economy strong, interest rates low and corporate earnings up, the market took off in early 2020, hitting one new high after another.
But that came to an abrupt halt as folks realized that the coronavirus wouldn’t – indeed couldn’t – be contained.
Investors panicked – and the market crashed. Trust me, “crashed” is not too strong a word.
On October 19, 1987 – Black Monday – the Dow fell 23% in a single day.
Between February 20 and March 23 of this year, however, the market plunged 34% – or nearly 1.5 times as much.
It was the fastest bear market ever.
By then we had stopped out of all but two of the 16 stocks in our Oxford Communiqué Oxford Trading Portfolio, with an average gain – including all winners and losers – of 33.2%.
That was the end of Phase 1 of the coronavirus crash.
Phase 2 began the very next day, the same day I put out a Portfolio Update to Oxford Club Members headlined “It’s Time to Load Up Again.”
I reintroduced two stocks to our Trading Portfolio and recommended averaging down on three others in our Ten-Baggers of Tomorrow Portfolio, a select group of stocks with the potential to rise tenfold or more.
Over the next three weeks, I added two more stocks. Those turned out to be good moves, as the market rallied 27% from March 24 through April 14.
That big bounce marked the end of Phase 2, however.
I’m not saying there isn’t more upside ahead for stocks. There almost certainly is.
But in the weeks ahead – during Phase 3 – I expect trading to turn exceptionally choppy.
Why?
We’ve seen the big sell-off, where investors became unduly pessimistic and sold stocks regardless of fundamentals and valuations.
We’ve seen the big bounce, where investors realized that the coronavirus is bad but it isn’t the end of the world as we know it.
Now we are entering a far murkier middle ground.
On one day, investors will focus on record central bank and government stimulus, rock-bottom interest rates, cheap energy and scientific progress against the pandemic.
On the next, they will focus on the unprecedented economic contraction, the sharp downturn in corporate earnings, the slow reopening of the economy and the continuing health challenge of the virus.
We are truly sailing in uncharted waters.
Good investing,
Alex