Errr... what is happening in the stock market???

my oh my what the heck is happening the

cboe volatility index is spiking

opec can't strike a deal so wti crude is

at its highest level in six years aka

oil is at its highest level in six years

and we're finally just now starting to

think that

maybe inflation will inflict downward

but

now because we're seeing a spike in oil

prices people are freaking out thinking

oh my gosh is this going to drive

inflation higher

we already know that there are linkages

between producer price inflation going

up when oil prices go up and so the

market is

starting to freak out the s p 500 is

down a half percent the dow

is down one percent and look i know this

is kind of small for the indices but

it's definitely a change in direction

for the indices especially since

as soon as just this morning they were

hitting all-time highs and now they're

not

and at the very same time yields on the

10-year have just plummeted down to 1.37

which is

usually good for stocks but apparently

now it's not good for stocks

all at the same time as amazon is up

four and a half percent so

what the heck is going on

let's talk about that also stay tuned

because i'm gonna talk a little bit i'm

gonna give you a little

guide although i'm not going to reveal

the exact trade i'm going to give you a

little bit of a guide as to how this

morning

i took advantage of an option contract

that gave me a 187

500 credit and i didn't even have to

risk

that much money relative to the credit i

got

i'll tell you a little bit more about

that as usual though remember

that i share every single buy and sell

alert that i make in my stocks and

psychology of money group

which you could join as well i have

extended that coupon code briefly linked

down below that i'm not leaving code

we had some trouble streamlining

increasing the prices

but we will be increasing the prices

again as soon as that i'm not leaving

code is over

the prices will be going up and so yeah

sometimes you hear that there are coupon

codes

sometimes there aren't but the price

does go up over time the net price goes

up over time so check that out link down

below before that price goes up

all right so let's put the puzzle uh

pieces together of this

messy puzzle game so let's break this

down first

why is volatility up well first of all

volatility measures

fear it measures a rapid change in

underlying prices

kind of like a rapid reshuffling in the

stock market so when people are quickly

shifting to different places

and we see rapid fluctuations in prices

that we usually don't see

we tend to see cboe volatility up

okay so people are reshuffling got it so

where are they going and what are they

leaving great let's talk about that but

first we have to know a little bit more

we know that the second thing that's

happening is why are

bond yields going down because that's

actually going to give us a little bit

of insight into what the heck people are

doing

so bond yields going down

all right let's unpackage that a little

bit if bond

prices go up

that is bonds become more expensive

then yields go down you're paying more

for a set amount of money so the yield

goes down got it so

basically yields falling means bond

prices are going

up well if the price of this

by the dip coffee mug is going up

then there's either a supply shortage or

there's a lot of demand for this coffee

mug

and in the case of bonds there's a lot

of demand for the bonds

hence why when bond prices go up because

there's lots of demand

yields actually go down which is what

we're seeing so bond prices going up

means

more people buying them coffee mugs more

people buying them bonds

okay so more people are buying bots why

would people be buying bonds

well people would buy bonds if they

potentially suspect that

inflation is going to go down because

inflation is going to keep going

up then you wouldn't really want to buy

bonds that yield one point three seven

percent on the tenure right

doesn't make a lot of sense you you

would see generally bond yields go

down when more people are buying now the

fed has been buying but they've been

buying at a consistent rate

and so the market is coming in actually

buying more

they're not offloading these bonds like

crazy

yield leading yields to go up like they

did at the earlier part of the year

and so in case any of this bond stuff is

confusing think of the bottom line what

are people doing

well people or banks or institutions or

pensions or hedge funds are saying

hey we need to put a little bit of money

or maybe a little bit more money

into safety into the safety of bonds and

to what if inflation does start

inflecting down

and we end up having a little bit of a

risk of deflation potentially

who knows the point is the flight to

bonds no matter where you stand on the

inflation debate because i know half of

you are hey

big inflation is coming and half of you

are saying no inflation is coming

i get it and i respect that i think it's

it's very good

that you have your belief and you stick

to it and then adjust based on whatever

data you're seeing

but the point is when bond yields are

falling it sends a little bit of a

signal that for some reason

parts of the market are fleeing to

safety

okay this is interesting because if you

now look at which

stocks are down you see a little bit of

a flight to safety

as well think about this if we do have

an inflection to lower inflation going

forward

then generally people flee

to growth stocks because that way you

could still get

growth in a low growth era because

growth stocks are well

growth based and value and recovery

stocks get beat up

this is why most of the recovery stocks

like dave and busters or cheesecake or

the airlines are down today they're all

red today right

but what's really crazy is that this is

something else

is if you actually look at most tech

most tech is actually also

down today but the tech that is up

or not down as much is tech like this

amazon up four and a half percent apple

up one and a half percent google amd

either flat tiny little bit down or tiny

a little bit up on the day

while at the same time you've got higher

risk stocks

like specs which have a lot of growth

whether it's fintech growth like sulfi

or growth like tesla but more uncertain

growth

suffering down three to four percent

that's a lot

and so what's happening folks we have a

flight to safety that's happening today

now how long this flight to safety will

last we don't know

but what we're seeing is we're seeing an

escape from all

forms of higher valuations recovery

higher valuations gone

spax higher valuations get away higher

valuations and tech get away

we're seeing a flight to safety and

bonds and we're seeing a flight to

safety and stocks

and that flight to safety in stocks is

feng

because you get a combination of safety

against inflation because you have

growth

but you also have safety against

potentially deflation because these are

lower valued growth companies so they

still grow

and they have lower valuations so you're

paying less of a premium for that growth

it's kind of like why people are going

into bonds it's flight to safety

and so in my opinion this is a little

bit of what's going on we have a flight

to safety

assets now how can you make

money if you believe this flight to

safety is

transitory that is you think people are

for the short term going to go into

a flight to safety and then eventually

when the flight to safety stocks like

fang become really expensive again after

they break out

then people are going to transition

again into the a little bit more risky

tech stocks or consumer discretionaries

or other growth

stocks that were originally looked at as

a little bit highly valued

but now because fang has maybe shot up

again the others start catching up again

so in other words if you believe that

you want to be a long run owner

of certain growth companies

or specs or higher valued companies

that are all red today or mostly all red

today

then what's the strategy you might take

advantage of in an environment like this

personally the strategy is selling

puts and that's what i announced this

morning in my stocks in psychology of

money group

i sold a very specific stock with very

specific expirations and i was able to

make a hundred

sixty seven thousand five hundred

dollars

and worst case scenario i have to buy

438 000

of a stock i want to own anyway

so in other words if you divide 187.5

divided by 437.5

i made a 43 return

instantly on a stock i want to own

anyway so in other words i could have

just bought the stock

today or i could have taken this extra

42.8 with me now there are things that

go into this like opportunity

cost and collateral but sometimes using

collateral is okay when you're not

otherwise looking at making other moves

or buys i mean anytime you make one

decision you have an opportunity cost to

consider

but folks this particular option move

this was a

no-brainer for me this morning absolute

no-brainer and so what i recommend you

do

if there are companies that you're

looking at where you're like i want to

own this

i want to buy the dip you know we're

going to huddle this thing to the moon i

want to be i want to be exposed to a

bigger position here

consider selling some puts now always

remember that

options come with risks so you have to

fully understand

options risks and i'm not the person

who's your financial advisor who can

fully explain to you all of your your

particular risk

so remember if you lose money don't sue

me bro

but if you go to the moon with me hit

that subscribe button

and we'll see in the next video and

hopefully you'll use that extended

coupon code link down below

before the price does go up because yes

the price does go up

over time last year the course was uh

was selling for a cost of 200

less now it didn't include technical

analysis and options which it now does

and see that's what i stand for sure

price might go up

but value goes up more thanks so much

and folks we'll see you in the next one

[Music]

you