Embracing Volatility Will Save Your Retirement

Everybody’s asking… What in the world did we say last week?

What came out of our mouth when we took the stage at The Oxford Club’s huge Investment U conference?

We could have said a lot. But we had only 30 minutes.

We got right to the point.

And what we said can save your retirement.

After we mentioned the supermodel in our midst yesterday, surprisingly few readers wanted details on who she was or what she was doing there. Instead, they wanted to know what we talked about on stage.

What juicy nuggets did we give the audience?

Did we rail against the Fed as we’re wont to do?

Did we blow away the smoke that hides the truth behind Big Pharma?

Or did we put on our armor and pound home the idea that men today aren’t the men of yesterday?

Nope… we went for the gold.

Saving Your Retirement

We took 30 minutes to show why the average investor is suffering from a nasty case of lousy returns.

The whole thing hinged on this chart:

The Only Time Buy and Hold Works

It looks a bit crazy, but it’s a simple chart.

It compares market volatility (the dark blue line) with the S&P 500.

It’s a sad tale.

The chart shows us – look at the section with the arrows carefully – that the only time a “traditional” investment strategy worked over the last five years was when volatility was on the decline.

In other words, the only time a “buy and hold” strategy paid off was during a rare year of overall market quietness.

As the mainstream financial press pondered whether volatility was dead, the markets surged higher.

All we must do, that lonely little section of the chart tells us, is plop some money in the market and wait for things to settle down.

But there’s a grand fallacy in the idea.

It assumes volatility is dead.

But it’s not.

Anybody who’s dared to pay attention over the last 24 months knows that notion is bunk.

Risk Gets Riskier

We told the audience in sunny Florida that something peculiar has happened. Not only is volatility not dead… volatility has gotten volatile.

You may have never heard of the VVIX.

It debuted in 2012. Its job is to measure the ups and downs of the VIX.

In other words, if you’re open to Wall Street jargon… it’s the fear gauge for the fear gauge.

It tells a dire tale.

Another good chart…

VVIX The Fear Gauge for the Fear Gauge

With spikes of 50% or more in the span of just a couple of weeks, clearly things are moving fast.

Volatility no longer comes to town, hangs around for a few weeks and then gives us a long goodbye.


It shows up on our doorstep in the morning and sneaks out of town by sunset.

The unprepared, as you may know too well, get slaughtered.

The New Way to Get Rich

This volatile nature of volatility has taken the idea of “buy and hold” and turned it into “buy and pray.” For proof, look at the right side of that first chart above. As fear spiked… the markets went nuts.

Unless you enjoy losing money, it’s why you must use a different strategy.

Times have changed.

We’re no longer using rotary phones… but we bet many readers are using the same investment strategy as when we did.

Again… things have changed.

With volatility moving faster than ever, you must use an investment strategy that can keep up.

Clearly, buy and hold won’t cut it. The average investor today is earning less than 3% on his portfolio.

The solution, what we told the salivating audience in Florida, is to take advantage of the volatility.

Yes, keep some assets in a conservative buy-and-hold portfolio. After all, it’s always good to hit our knees and pray.

But there are new strategies… like short-term trades, options and new technical patterns… to take advantage of.

If you’re not using them, you may need to follow in that supermodel’s footsteps and rely on your good looks for retirement.

For us… that’s not an option.

Even the power of prayer won’t get that job done.

P.S. We posted a three-minute clip of our talk on Facebook. Check it out for a quick synopsis of how volatility has led us to use more technical analysis in our trading strategies.


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