Here's how investors can turn periods of market downturns into opportunities.
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00:00It tells the average investor to use some caution and protect their portfolios.
00:05Volatility index tends to move up and down when the markets are worried or are acting very complacent.
00:14So when the market is moving higher, we have a lot of complacency in the markets.
00:20We see volatility starting to move down.
00:22And people are not concerned or worried about markets going down.
00:26But when the volatility index is going up, we see people reaching for protection.
00:30They're getting scared. They're getting worried and nervous.
00:31They're selling stocks.
00:33And it really is a difficult situation.
00:36But if you're in there in the markets right now to make money, what you need to do is you need to protect your portfolios.
00:45The best way to protect your portfolio is to buy some put options.
00:48Put options are cheap when the markets are up, when volatility is down.
00:53They tend to get more expensive when volatility is rising.
00:56But on days when the markets are getting pounded, you're really happy to have that protection in place.
01:01If you're spooked by all the market volatility, I will tell you this.
01:04If you have a long-term investment horizon, say 25, 30 years,
01:09use the market volatility as an opportunity to get involved in the stock market
01:14and to add to your holdings and to buy stuff that has gotten beaten up quite significantly.
01:20And we see opportunities like drops in the markets happen all the time.
01:27And they've been happening all through history.
01:30And they've always been great buying opportunities.
01:32Look, the stock market goes from the bottom left to the upper right.
01:35If you look at a long-term chart of the stock market, even if you look back 25, 50, 75, 100 years, that's the case.
01:44Even big pullbacks like we had back in 1987 when the market crashed.
01:49It just shows up as a blip on the screen.
01:51It was a great opportunity to get in there and start buying stocks.
01:54And that was nearly 40 years ago.
01:55So I think that you've got to keep a level head.
01:59You have to have some protection on.
02:02Always have some cash available.
02:04And when opportunities come in front of you to buy stocks, just go ahead and do it.
02:14Let's go ahead and do it.