Your Net Worth is in Jeopardy!

Hey, everybody, Chuck Whitman here, and I need your attention for just two minutes. I’ll be quick. But I want you to listen to what I have to say, because it’s very important. I want you to understand that your net worth is in jeopardy. Your retirement accounts, your investments, even your house, the value of everything in your net worth is actually at risk right now. Why do I say that?

If we step back for a minute, what I want you to understand is what the current backdrop is in our economy.
When COVID-19 Hit the world and hit the United States, specifically, the United States Federal Reserve, our central bank, responded by aggressively providing liquidity to the financial system, and the level of liquidity that was provided by the central bank was unprecedented. To give you an idea, there was $4 trillion in circulation in the US economy in January of 2020. As of November of 2021, that amount has grown to $20.345 trillion. What that means is that over 80%, of every dollar that is in circulation in the United States, has been printed in the last two years. This is unprecedented, historically, unprecedented injections of liquidity and in stimulus into the economy, and it was not just in the United States, but it was around the world. This is important because when you hear these stories, or you yourself have experienced seeing your 401k, your IRA, the value of your home, all of these things take off, either you or people you know, have invested in cryptocurrencies and seen them explode. You’ve invested in stocks, individual names, some of these GameStop, or AMC or some of these other hot stocks, Tesla, Apple, we could go on and on.

There’s all these stories of people who’ve become rich in the last two years.
And hopefully you’re one of those people. Why did this happen? It’s not because they’re geniuses, it’s because 80% of every dollar ever printed, has been printed in the last two years. All that money has to go someplace. In a lot of it went into financial assets, a lot of it went into stocks, a lot of it went into cryptocurrencies, a lot of it went into homes. This is important to understand, because everybody’s been riding the wave of liquidity to incredible prosperity in the last two years, which is awesome.

But what you need to understand is that is about to change.
Why? Because in December last month, the Federal Reserve gave a signal to the market, saying that in 2022, they were going to begin to raise interest rates, which they had cut interest rates to zero, and they were going to stop injecting money into the system. Then today, they came out with the minutes from the meeting last month. And what it showed is that the expectations of when they were going to do this were actually faster than people knew. In other words, the Federal Reserve thinks they’re going to raise rates sooner, and they’re going to stop buying bonds sooner.

Now a real simple lesson in economics
… is that when you inject money into the system, things increase in value, economic activity picks up. And when you take it out, economic activity contracts, and the value of values of assets goes down. This is a cycle that’s gone on over and over. And I won’t get too deep into this. But what’s happened over time is that it takes it’s like a drug addict, it takes more and more drugs to get the same high. Our system now requires the injection of more and more money to get the same economic effect, and then as soon as you start to draw the money out, you get the cold turkey effect. Everybody starts to go into withdrawal, and the system goes into shock.

Well, this is coming this year.
And it’s not only coming this year, it’s gonna come bigger and faster than what people thought. Now how that affects you is that means that the value of your portfolio, the value of your network, the value of your your retirement accounts, your 401k, your IRA, your investment portfolios, your home, even your business success, and even in your job. All of these things are going to come under pressure, and I want you to be prepared. I want you to be ready.

Now, I spent years and years, both trading options and training traders how to trade options, and I’ve spent years studying macro economic cycles, understanding trading system development, in how to link trading and options together. I’m going to be running a workshop in January, that I’m going to really be teaching people the basics of options. The reason this is important is that if you 1) can understand what’s coming and prepare yourself for it and 2) understand options, you can use options to be able to still make money if the market goes up. One of the things that happens when this occurs, when the Fed starts to project or communicate that they’re going to be raising rates and putting less money into the system, a lot of times what happens in the early stages is the market shakes it off.

People shake it off.
There’s a reason for this because there’s a psychological effect that’s going on, people are making money, and they don’t want it to stop. So they go into denial, that things could actually change. What they do is they look for answers, they look for feedback that validates their beliefs, rather than being willing to change them. So if they’re making money, because things are going up, they’re going to look for reasons to stay in. We need to be authentic, we need to be objective, and see things for as they really are. Sometimes they’re very supportive, sometimes they’re very negative. When they’re very negative, that’s when we want to pull back, but when they become negative, like we’re talking about here, the market can actually continue to go higher, it might go higher, another six months, it could go higher another year, and part of this is because people will keep buying because they’re in denial. But what will happen is it will turn on a dime, and if you’re not ready, you won’t get out.

You won’t get out of the way, it’ll hit you fast.
We saw this today today was the biggest down day, the NASDAQ in a year. Fast, the market goes up slow, goes down fast. The saying is you walk up the stairs and it jumps out the window. So we want to be prepared. If we understand how to use options, we can limit our risk., and know that when this inevitable moment comes, whether it’s next month, six months or a year from now, we know how much we can lose, and we can limit the damage in our portfolio. If we’re able to limit the damage to our net worth, that’s going to put us in a position to respond in an opportunistic way later on, which I’ll talk about down the road. But right now, my goal is to make sure that you are safe. That’s what I want for you. To do that we need to understand the environment we’re in.

We need to understand the steps we need to take to make ourselves safe, in a day like today.
I was long stocks today. But because I have them expressing options, I should make money when the market goes up and lose money when the market goes down. Because I’m long the market, but because of the option structures I had on I actually made money today. On a down day. So that’s not going to happen every day, but it can happen. But at the minimum, I come in losing no sleep.

I know exactly what I can lose.
I can respond with conviction. I can respond when the inevitable adversity comes. I can hold strong to my plan and respond to what I need to do rather than acting from fear or panic, which we make horrible decisions.

So if I’ve got your attention, I’m going to do a webinar tomorrow at 12 PM Central (recording accessible via link below). The link is on the page, register for this webinar. I promise I’ll make it worth your time. I will give you some valuable things to think about, and I’ll help you set a path for how you can be safe in 2022. You can have a chance to make money and more importantly you can make sure you keep what you have.

So, I will see you tomorrow. Take care!
– Chuck Whitman