“Buy when there’s blood in the streets, even if the blood is your own.”
The story behind this famous quote, as it’s often told, goes as follows.
After the Battle of Waterloo, Baron Nathan Rothschild used advance information about the British coalition’s victory in Belgium to profit greatly off United Kingdom gilts. U.K. gilts are the equivalent of U.S. Treasury bonds, and Rothschild, privy to the information before most, positioned himself long on these gilts. As word finally began to spread about Napoleon’s defeat, British stocks and bonds soared, and Rothschild made a killing.
The reason Rothschild is accredited with saying “Buy when there’s blood in the streets” is because prior to the public (and many financial and government magistrates) learning the outcome of Waterloo, news of several British defeats at Napoleon’s hands had pervaded the public narrative. Fear that the British would lose a very costly war sparked a frenzy of selling, driving asset prices into the basement. But thanks to his intricate network of private couriers, Rothschild knew the information about Commander Wellington’s victory at Waterloo was true. Capitalizing on this confusion, he bought up all the depressed assets he could. He then sold them at exponentially higher prices after the truth came to light, and British assets soared in value… or so the myth goes.
The likelihood that Rothschild ever said the words he’s famously known for are slim to none. In fact, they were most likely attributed to him as part of an antisemitic campaign to paint Jewish bankers as evil goldmongers. Historians aren’t even sure if buying the Waterloo dip was how the family made its first fortune. Regardless of whether this is a great bedtime story for finance folks or the true origin story of a legendary money manager, the takeaway from Rothschild’s “blood in the streets” story is that the best time to buy and trade financial assets is when folks are panic selling. The January 2022 sell-off left a lot of blood on Wall Street, but we can apply the Rothschild lesson to thrive off the current market volatility.
As it stands currently, market watchers are not sure about anything. Truth be told, we have a lot to be uncertain about.
It’s a very tough environment for investors right now…
But it’s a great environment for traders — which is why I’m launching a new trading service that thrives in these conditions. But more on that later…
Uncertainty Is the Mother of Volatility — but There’s a System to Beat It
When it comes to trading stocks and options, volatility is good. Simply put, market volatility is just an increase in the rate of price changes in stocks. We need these changes to make money off our trades. The more volatility (or change) in the market, the more price changes we see. That means we have more opportunities to make money as we trade around these changes. This is why traders, unlike investors, can thrive in frothy sideways and bear markets in addition to bull markets.
For example, the overall market for January was terrible. The S&P 500 fell 6%, the Dow fell 3.3%, and the Nasdaq fell 14%. While market carnage bled Wall Street dry, beta testers of my new system and service (which I’ll be debuting in a few weeks) locked in 51% and 205% on trades we opened and closed during the sell-off’s peak.
We bought when there was blood in the streets, just like Baron Rothschild did, and we won big.
And since I expect more volatility in the coming weeks, I also expect more opportunities for quick trades that produce big returns while investors tread water and play defense.
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More Volatility Is Coming
No one can accurately say how many rate hikes we may see this year. Some are calling for three, while others say seven or eight hikes could be on the way in 2022. Some say the moves will be 50-point increases, and others say they will be quarter-point increases. St. Louis Fed President James Bullard tried to offer reassurance recently, stating, “I don’t think a 50-basis point hike really helps us right now.”
But that was before we got the news that unemployment was at 4% and trending lower. The U.S. Bureau of Labor Statistics also reported that inflation, as measured by the CPI, hit 7.5% in January — a 40-year high. On Thursday, experts began calling for a 50-point hike come March.
Plus, there’s uncertainty about COVID and the information surrounding it. And let’s not forget the uncertainty regarding a potential Russian invasion of Ukraine.
On top of all this, overall, earnings have been mixed this reporting season. Big misses from popular names like Meta (NASDAQ: FB) have upset the greater indexes and further added to recent volatility. Given the downward trend in earnings beats, we have a legitimate chance to see a few more downside surprises over the next few weeks. This would all bode well for us trading on volatility…
Like when we locked in over 200% to kick off 2022 during one of the worst trading weeks in years.
Trading to Be on Top
Whether you realized it or not, today was a brief behind-the-scenes look at the brand-new project I’m working on.
It’s the culmination of a decade’s worth of hard work, and I’m very excited to be launching this brand-new service soon. But what you may not have realized is you’ve had a chance to test-drive this new system a few times as a reader of Energy and Capital over the past few months.
It’s how, in these very pages, we locked in 295% on a short trade on Starbucks (NASDAQ: SBUX), 56% on the VanEck Vectors Semiconductor ETF (SMH), and 207% on Chevron Corp. (NYSE: CVX), among many other wins — all in a few weeks’ time!
Long story short, don’t let the recent volatility or the coming froth ruffle your feathers. There’s a system to beat today’s market. I own it and will share it with you soon.
In the meantime, happy trading!
To your wealth,
Sean McCloskey
Editor, Energy and Capital
@TheRL_McCloskey on TwitterAfter spending 10 years in the consumer tech reporting and educational publishing industries, Sean has since redevoted himself to one of his original passions: identifying and cashing in on the most lucrative opportunities the market has to offer. As the former managing editor of multiple investment newsletters, he's covered virtually every sector of the market, ranging from energy and tech to gold and cannabis. Over the years, Sean has offered his followers the chance to score numerous triple-digit gains, and today he continues his mission to deliver followers the best chance to score big wins on Wall Street and beyond as an editor for Energy and Capital.
