4 Ideas to Profit From During Market Storm
No one knows if this is a minor correction or a full-fledged bear market, however, investors can still profit during this time of uncertainty by making the right bets. In this article, I’ll be penning down 4 ideas that could make investors some money irrespective of the condition of the market.
Fitbit has rallied strongly from its 52-week low levels.
I have always believed that the smart watch segment is a fad. The smartphone boom is over and investors are actively looking for the next big thing, but I am sure smart watch is not that thing. As a result, I expect Fitbit to continue struggling.
Moreover, the competition in the space is also increasing rapidly and the launch of Apple Watch 2 (as much as I don’t like it) is bad news for Fitbit.
Image by skeeze / Pixabay
I have been recommending shorting Fitbit since it was trading over $40 and I still think it has a lot more downside to offer.
Barrick Gold (ABX)
Gold stocks have been on a stellar run this year as the likes of Barrick Gold have outperformed the market by a wide margin. However, Barrick Gold has pulled back considerably over the last few trading sessions and is way off its 52-week highs on account of falling gold prices.
That said, I think investors should look at this pullback as a buying opportunity as gold prices tend to rise during the times of market uncertainty. Moreover, Barrick Gold is making the most of high gold prices by paying off its debt and increasing its efficiency. So, while Barrick Gold has retracted considerably in the last few months, I think the stock is a great bet going forward.
I have been wrong about Mobileye several times in the past. The stock has defied all bears by continuing to trade at inflated levels for a long time. The stock has rallied this year as well, but I am quite confident that fundamentals will eventually catch up. Although I may have mistimed my short recommendations, I still think the stock will eventually fall to considerably lower levels in the coming months.
Momentum stocks tend to get punished most during uncertainties in the market, and I expect Mobileye to be one of those stocks.
Netflix is another stock that I have recommended shorting before and most of my short calls have been profitable. The stock plummeted considerably after it reported its last earnings report, however it has since recovered without any improvement in its fundamentals and business.
With competition and costs growing rapidly, I expect Netflix to continue struggling in the near future and would recommend investors to short its recent rally.
Since I am currently bearish on the market, I have given 3 short recommendations as opposed to one buy call. As the current market is overvalued, I expect the three aforementioned short candidates to underperform in the coming months. As for buying stocks, I think investors should allocate a small portion of their portfolio to precious metal stocks. In addition to precious metals, investors can also consider buying Bitcoin as I expect the crypto currency segment to outperform in case of a market correction.
Published on Sep 13, 2016By Ayush Singh