“Dry Powder”

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Wall Street can’t make up its mind.

First came the airstrike on a Syrian airbase. In the days following, the Dow traded sideways as anxious investors debated the global political scene.

Next, the “Mother Of All Bombs” cleared an ISIS cave in Eastern Afghanistan. Wall Street temporarily made up their minds, as markets quickly sold off over 130 points.

But by Monday, one failed North Korean nuclear test apparently eased geopolitical tensions enough for the Dow to bounce back 180 points?

These Wall Streeters seem a bit short sighted to me. Which leads me to our next opportunity…

Uncertainty is the reason for Wall Street’s narrow focus.

Trump is proving he’ll go further than Presidents before him, which is actually pretty predictable in this case…

The unpredictable part – or uncertainty – that I’m referring to is on the part of other world powers and dictators.

Kim Jong-Un insists on testing nuclear weapons. Truly, the world is only a push of a button away from another use of nuclear force.

Meanwhile, over in Syria, Bashar al-Assad isn’t likely to sit back and wait for more airbases to get taken out. If the reports are correct, he’s already used chemical weapons on rebel forces. And really, there’s no telling where this ends (the Middle East is a war-torn mess.)

Add in the statement by Russian officials that Russia-U.S. relations are “the worst since the Cold War,” and you’ll quickly see that “Trump’s America” is in a dynamic war-threatened state — unlike anything we’ve seen since the 1960s.

As investors, we need to be prepared in uncertain situations like these.

So here’s what I’m suggesting…

Allocation Is Key — Keep Dry Powder

We don’t know when President Trump will drop the next “MOAB” bomb. And we definitely don’t know when Kim Jong-Un will test North Korea’s next missile.

But one thing is for certain — if these events do happen, markets will sell off like they have over the last 10 days, if not more.

And those that have dry powder will be able to cash in on this opportunity.

Long-time readers know that I’m all about asset allocation.

Cash, stocks, bonds, options, real estate… and more. These days it matters LESS about what you’re invested in and MORE about how you allocate your assets. Allocation is the most important element for long-term market success.

Well today I’m checking in with you.

Do you have enough dry powder in your arsenal?

Watch Out For Fallen Angels

Take a look at these examples from previous uncertain times:

  • After September 11, 2001, the Dow plummeted 14% in a week before rising back to similar levels in October.
  • June 23, 2016, Brexit caused the Dow to drop 5% in 2 days before rebounding 9% in one month.
  • Don’t forget the night Trump was elected. Dow futures were down as much as 800 points before sparking the 14% “Trump Rally.”

Although the recent 100+ point market drops don’t compare to these, you get the point.

The initial uncertainty sparks a selloff that can mean HUGE buying opportunities for some sectors — if you have dry powder.

Look at the sectors where people won’t stop consumption based on uncertainty in Asia or the Middle East. Are people really going to stop buying medicine because Kim Jong-Un threatened a nuclear test? And are people going to stop buying household staple products because Russia-U.S. relations are considered poor?

To capitalize on these events, stay tuned for a geopolitical event that does move the markets.

Also, stay tuned to this space. I’ll be watching the global drama as it unfolds in the next few days and months, and will let you know what additional moves you should make to protect your hard-earned wealth.

Here’s to growing and protecting your wealth!

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge
EdgeFeedback@AgoraFinancial.com

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