Investors need a new strategy for volatile times, says author of Tao of Trading.  Here's what he recommends.

Investors need a new strategy for volatile times, says author of Tao of Trading. Here’s what he recommends.

Be smart, be quick and don’t rely on buying dip.

That was the research arm of investment institute BlackRock, which on Monday laid out a “golden” landscape for investors grappling with inflation and recession fears as the earnings season looms large.

Our call of the day comes from the founder of the Tao of Trading school of options academy and the author of the book of the same name, Simon Ree, who also sees now as an opportune time for investors to change their routine.

Included in his trading advice in a bear market is a suggestion to hold “a lot more money than you’re used to holding” and lose the traditional mindset that dictates that eggs are needed “in a certain number of baskets,” Ree told MarketWatch in an interview Monday.

Rather than asking where to put their money, investors should educate themselves on “how to identify high-probability moments in time to own stocks, own commodities, own cryptocurrencies, whatever it is,” he said.

After that, the process should be, “I’m going to buy it, I’m going to manage it, and I’m going to set a profit target, and maybe just a few of these trades go through my portfolio every month or every month. a year and just try to generate returns that way,” said the Singapore-based trader, who spent 25 years in private and investment banking, with stints at Citigroup and Goldman Sachs.

And a fresh strategy is all the more important as Ree prepares for a lot of volatility. “This is a potentially tricky market. I think the stock is about to rally to destroy the shorts and keep the bulls nice and cozy before destroying the bulls with a huge flush lower. We’ve never seen stocks celebrate the prospect of a recession like this,” Rees he tweeted last week.

Further explaining the tweet, he said cooling commodity markets could fuel hopes that inflation has peaked and the Fed will turn dovish, sending stocks higher. Markets appear to have responded to the immediate recession, but strong labor and housing markets will provide a buffer for now, he adds.

Those hopes may or may not be fueled by Wednesday’s June consumer prices, which some say are close to 9% annually.

“But the bigger picture is this: monetary tightening has led to recessions in all but 10% of cases since the Fed was founded in 1913,” Ree said.

As for a bullish flush below after any rally, we can wait.

“I think once it’s confirmed that we’re in a recession, the S&P 500 SPX,
+0.28%
could be much lower than where it is right now and the Fed will likely start easing again. I think that’s still a long way to go and I don’t think the Fed will start easing until unemployment overtakes inflation as the issue of the day,” he said.

Our final word from Ree is on what he sees as a blind spot among investors. “I think this buy-buy mentality has just been so deeply ingrained, I think when this bear market is over, people are going to give up stocks for the next generation…but that will be a buying opportunity.”

Read: The next big stock market rally may just be a bear in bull’s clothing

Buzz

Small business owners have never been more pessimistic about the future of the economy, a new survey shows. Later, we’ll hear from Richmond Fed President Tom Barkin.

Canoo GOEV,
+97.05%
shares rise after Walmart WMT,
+0.31%
ordered 4,500 of its EV vans.

PTON platoon,
+3.92%
was out of business after the home fitness company announced it was suspending operations at Tonic Fitness Technology in Taiwan as part of a plan to wind down all owned manufacturing operations.

London’s Heathrow Airport has asked airlines to halt ticket sales to cope with rising passenger demand.

BYD 1211 shares,
-11.93%
collapsed in Hong Kong amid speculation that Warren Buffett’s main backer Berkshire Hathaway BRK.A,
+0.06%
may be about to sell shares in the Chinese electric car maker.

Amazon’s two-day Prime Day event kicks off on Tuesday, with deal-seekers hoping to score deep discounts amid rising inflation.

PepsiCo PEP,
-0.02%
reported sales and profits that beat forecasts. We will hear from Delta Air Lines DAL,
+4.51%
on Wednesday, JPMorgan Chase JPM,
+0.56%
and Morgan Stanley MS,
+0.38%
on Thursday with Citi C,
+0.28%,
Wells Fargo WFC,
-0.25%
and UnitedHealth UNH,
-0.04%
on Friday. More than 70% of the S&P 500’s constituents will report by July 29.

Read: Why Wall Street profit expectations for megabanks have cooled

Chart

It’s been a bit of a struggle among forex traders with EURUSD,
+0.09%
inches from parity before rising against the dollar early Tuesday. It will be the first time since 2002.

Markets

Dow DJIA,
+0.31%,
S&P 500 SPX,
+0.28%
and Nasdaq Composite COMP,
+0.65%
opened in the green, with bond yields TMUBMUSD10Y,
2.911%
down and oil CL.1,
-4.64%
down 4% and back below $100 a barrel against the DXY dollar,
+0.07%
China’s COVID strength and concerns. Bitcoin BTCUSD,
-2.36%
dropped below $20,000.

Read: Skeptics say Biden’s visit to Saudi Arabia is unlikely to significantly lower oil prices

Tickers

These were the most searched stock exchanges on MarketWatch as of 6:00 last night:

Ticker

The security name

GM,
+2.67%

GameStop

TSLA,
+0.80%

Tesla

AMC,
+4.10%

AMC Entertainment

NIO,
-0.92%

NIO

AAPL,
+1.88%

Apple

TWTR,
+2.39%

Twitter

MULN,
-4.17%

Mullen Automotive

AMZN,
+0.63%

Amazon

BABA,
-1.53%

Ali Baba

NVDA,
+1.08%

Nvidia

Random reading

Olympic champion Mo Farah says he was trafficked as a child.

An American tourist is facing charges that he entered the crater of Italy’s Mount Vesuvius to retrieve his phone

A galaxy far, far away for the first time, compliments of NASA:

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