Markets Are Ignoring the Headlines – Here’s Why You Should Too

I was in an interview on Cheddar TV two days ago, and I was asked a strange question. Cheddar is the live streaming financial news network that calls themselves “post-cable” news. The question: “How can investors approach market volatility due to geopolitical risks?”

What I didn’t do was correct the host and say that markets aren’t very volatile at all. That would have been bad form. But this chart shows the current reality on volatility:

The lower line is the Average True Range – an indicator that represents how “jumpy” the market has been acting by measuring how big the daily moves are. In times when big daily moves are happening, like December of 2018, the indicator jumps much higher, as you can see on the chart above. Right now, and for the last couple of months, it has been very muted.

I did respond to the question by talking about how markets are actually shaking off those geopolitical risks and moving higher. I likened current market conditions to those in 2005-2006 and late 1998-1999 when markets brushed off outside news and kept trudging higher.

Click here to watch the interview.

All The Shiny Toys at CES Hide the Real Money to be Made

Tuesday marked the beginning of the largest annual event in customer-facing tech: The Consumer Electronics Show (commonly known as “CES”), held each year in early January in Las Vegas.

175,000 people from 160 countries will be pouring into the Las Vegas Convention Center to see the latest TVs, speakers, robot vacuums, and car concepts from hundreds of companies.

But there’s a reality between the eye-candy that the media wants to show you and the underlying reality where real money can be made in the markets. Finding those stock price-moving pieces of data is what CES is all about.

It’s truly a spectacle of new tech with fanciful features, outlandish promises, and more often than not, ludicrous price tags.

The show only just started, and we’ve already seen:

  • A razor from Bic that measures how thick your facial hair is and how dull its blade is, and sends that information via Bluetooth;
  • a prototype electric car from Sony, the electronics giant that’s never dabbled in transportation before;
  • a rowing machine with a built-in 17.3-inch screen that turns your workout into games; and
  • a flying taxi concept from Hyundai and Uber.

While a few of these fanciful items may make their way onto consumers’ wish lists, only one of them moved the stock price of a company – and we’ll cash in when it continues up. More on that below.

But don’t expect the flood of useless headlines coming out of CES to end there. We still have the rest of the week left, and I’m sure there are several big announcements still to come. The headlines will be full of gadgets coming out of CES for days.

As traders, it’s tempting to see this as a prime opportunity to make some money. It’s a trap that’s very easy to fall into – a company announcing a new and exciting product must be a good trade, or so we’d like to think.

Coverage from Wall Street and the Media pushes this idea too.

As I mentioned above, the reality gap is that what’s new and exciting is not always profitable for you…

Quite the contrary.

Instead, there’s another way to profit from CES and events like it