Buckle up folks, because as I’ve been telling you, the Fed-driven volatility rollercoaster isn’t over yet. In fact, as top analyst Ross Givens points out in his latest piece, “The Fed Volatility Window is Still Open” – and it’s going to have huge implications for your portfolio in the coming weeks.
As Givens writes, “The Fed has a dual mandate to support maximum employment and keep inflation around 2%. Right now, inflation is running hot while employment has room for improvement. This means the Fed is likely to keep interest rates higher for longer in order to tamp down price increases.”
Friends, this is critical. It means we’re likely to see sustained volatility, as Givens explains:
“This dynamic sets up a ‘volatility window’ where economic data releases that provide information about the labor market and inflation have the potential to move markets significantly in either direction, depending on whether the data exceeds or misses expectations.”
But while others panic, we’re going to play this smart. Givens provides several ways to potentially profit from this volatility, including:
- Buying put options on the S&P 500 or other broad market ETFs as a hedge against downside risk
- Going long on the VIX, which tends to spike during periods of high volatility
- Focusing on high-quality, defensive sectors like consumer staples, utilities and healthcare which tend to outperform in uncertain times
The key is to be positioned BEFORE the big moves happen. As Givens puts it:
“Investors who wait until after a significant data release to make adjustments to their portfolios may find themselves chasing the market.”
So here’s your action plan: Review your portfolio NOW. Make sure you have downside protection in place, and consider adding some of the volatility plays Givens mentions. Because mark my words, this “volatility window” is going to create some big swings – and big opportunities for those who are ready.
Keep your eyes peeled, stay nimble, and get ready to pounce when the moment is right. The Fed volatility game is on, and we’re going to come out on top. Stay tuned for more.