It used to be that buying a stock was like buying a house. You’d find a house
that looked super from the street – and inspect it carefully, before committing
to a deal.
But what if you
couldn’t get inside? Or even worse, what if the property changed after you
carefully inspected it, so that you ended up buying a house with a trashed
interior, or a crumbling foundation that made the house risky to live in, and
virtually worthless to sell? Or what if a new regulation made the house you
spent so much for – and had saved so long for – obsolete overnight, so that you
were left with nothing to show for the years of saving and investing, possibly
even forcing you and your spouse to forgo your long-dreamed-of retirement?
Instead, you both have to keep working.
That’s a lot like what we’re seeing in the U.S. stock market right now.
If the “house” I referred to is an analogy for the stock market, we’re all
having to watch as government regulations, elected lawmakers, credit providers,
rating agencies and others all work to change the way business is conducted – in
many cases, changing the game after consumers (investors) spend all their
hard-earned savings for that house (major stock or mutual fund purchase).
If that’s truly the case, it’s understandable if most U.S. investors are left
feeling burned – or even worse, helpless – to the point that they’ve decided
it’s better to just sit on the sidelines. After all, why participate in a game
in which there’s no way to win?
But what if you knew, ahead of time, what marketplace changes to expect? Then
you’d be in the driver’s seat – right? You’d know what to anticipate, could
craft a profit strategy to follow, and then could just sit back, watching and
waiting for the events you’ve already positioned yourself to profit from.
Investment expert R. Shah Gilani – a retired hedge fund
manager who’s been chronicling the credit crisis as a Money
Morning contributing editor – thinks it’s possible to peer into
the future and see the changes that are looming. Gilani, the editor of a new
trading service called the Trigger Event Strategist, is predicting a series
of so-called “aftershocks” from the financial crisis that investors need to
watch for.
These “trigger events” are seismic occurrences that will cause major
aftershocks. And the fallout from those aftershocks will bring about marketplace
changes that, properly played, can be exploited for profit, Gilani says.
“It’s like having a meteor hit the earth,” Gilani says. “Because of the
seismic-level events that will result from the aftershocks of this meteor
strike, there will be all sorts of other trigger events” that will translate
into profit opportunities, if properly played.
Some of these will involve going long – that is, actually buying the stock,
option or security that’s likely to benefit the most from the trigger event. But
this strategy can also involve short selling
– identifying the company, stock, fund or security that’s going to be punished
the most, and profiting on that decline.
In this story, we’re going to take a look at five key aftershocks investor
can look for. These are by no means the only ones Gilani is predicting: But they
are five of the most dramatic, and are among the most important ones investors
need to be able to understand and interpret.