Market Insights & Analysis from Kramer Capital Research

Listen to the Options Market and Stop Overthinking the Election 

Listen to the options market to avoid becoming one of the many investors who have essentially checked out until we know the way the votes stack up after the Nov. 3 presidential election. 

After all, they say, the electorate is too polarized to provide any kind of conviction and the polls cannot be trusted. I remember the news networks calling me at 2 a.m. exactly four years ago when Republican presidential nominee Donald Trump defied all the odds and defeated Democrat Hilary Clinton. 

Futures markets around the world were crashing, as people who guessed wrong thought it was the end of the world. Nobody on Wall Street had thought about what a Trump administration would entail. All they could focus on was that their models had failed.

But this time around, a Japanese news network has already asked me whether the market signals are predicting a President Trump or a former Vice President Joe Biden win. The answers are worth sharing with you.

Listen to the Options Market; Go from Opinions to Options

Everyone has an opinion and technology gives us the power to share infinite “hot takes” with millions of people simply by typing a few words and pushing a button.

It’s free. You don’t even need to come up with a compelling argument or think through all the consequences, much less test your logic. When you’re wrong, the only cost is reputational.

That’s why I focus on the financial markets, where talk is cheap until we back it up with capital. Pushing the “buy” button monetizes our opinion, putting our money where our mouth is.

Listen to the Options Market; the Trading Crowd is Sending Signals

And when you look at all the trades circulating across Wall Street, you can see what the crowd really thinks. It’s the best, most accurate polling system ever invented.

I’m paying the closest attention to the options market when it comes to predicting the election. Unlike stocks, there’s always a time component to options. You’re arguing that the future will play out as you predict before the contracts expire.

As it turns out, S&P 500 contracts expire on Nov. 2, the day before the election, and on Nov. 4, the day after. We can see exactly where the crowd thinks the market will go before the votes are counted.

These are the kinds of contracts we’ve traded with great success this year in 2-Day Trader. The market itself can soar, slump or simply go nowhere, and we make money on the tiny fluctuations in sentiment.

Listen to the Options Market; a 4% Swing in Less than Four Weeks Appears Ahead

Right now, these options suggest that the market is going to move about 4% in the next 3.5 weeks. That wide theoretical gap makes sense in this wild pandemic year.

However, the contracts are almost perfectly balanced on the direction of that 4% swing ahead. Traders simply aren’t willing to take sides. It costs roughly as much to bet on the S&P 500 falling below 3,400 as it does to back up the bull case for a return to record rallies on the horizon.

That’s what interested the Japanese reporters. They’d heard that when the S&P 500 is in positive territory across the three months leading up to an election, the incumbent party usually wins.

And when stocks drop in that three-month period, the incumbent loses close to 90% of the time. I don’t see that scenario playing out now.

Listen to the Options Market; S&P 500 Drop of 5-6% Would Be Needed to Erase August’s Gains

We would need to see the S&P 500 drop at least 5-6% to erase all the progress made in August. Unless Big Tech crashes again later this month, the options markets are signaling that we’ll avert that kind of slump.

That may bode well for a Republican win and a repeat of the surge of relief from many investors we saw in 2016. But this isn’t sentiment. It isn’t me talking. It’s just how the math works.

Math is how we keep racking up wins in the options market. All we need is a sense of which way a stock or sector is likely to move in a given time period. Then we see where the potential returns justify the risk.

We just scored 26% in High Octane Trader on a simple short-term bet against retail stocks. That trade only took a few hours to mature. 

Once we cash out, it no longer matters where the market goes. Wall Street’s rollercoaster continues, but we’re richer than where we started. 

We look beyond the news cycle every week on my Millionaire Makers radio show. Now there’s a podcast as well to keep you focused on opportunities to build real wealth while avoiding obvious threats. (Click here for a list of stations and archived episodes.)

Cannabis Corner: Not Everyone Cheers Kamala

While the vice-presidential debate failed to make much market impact, I heard a few investors cheer when Kamala Harris once again promised to do what she can to decriminalize marijuana across the United States. 

It wasn’t news. She’s said it before. And it doesn’t change the regulatory environment for the dispensaries or the cultivators that supply them.

But as a ray of relief in a gloomy season, it felt great. The stocks in the group I track are up 21% over the past week and at this point, the bulls have almost endless runway to keep running.

However, I can’t help but notice that some cannabis stocks rallied a lot harder than others. Once again, the pure cultivators feel the weight of their commodity-oriented business model. 

There’s simply too much dried plant matter to harvest, which drives prices down for everyone but consumers who insist on an extremely high-quality experience. 

As a result, while Aurora Cannabis Inc. (NYSE:ACB), for example, rebounded 9% this week, it’s still down a harrowing 48% since the market as a whole peaked on Aug. 31. 

And the year-to-date (YTD) losses get even bigger. Tilray Corp. (NASDAQ:TLRY) has lost 64% of its value over the past nine months. With that in mind, this week’s bounce is a healthy step in the right direction, but we’ll need a lot more than a political sound bite to really turn things around.

Once again, the real thrill is on the business-to-business side, where hydroponic equipment maker GrowGeneration Corp. (NASDAQ:GRWG) has become a Wall Street sensation. The decision to leave farming to others has been a good one.

I’m also pleased to see the buzz spread to private companies like Drop Technology, which has already made friends among my IPO Edge subscribers through its innovative “crowd-funded” market debut.

The IPO Edge portfolio is up big as I write this cannabis column, with two triple-digit-percentage wins accumulating profit and a recent 165% exit still radiating heat. More is on the way.

Update on Private ‘Off the Record’ Post-Election Summit

Finally, we are really excited to let you know about what is the first actual, in-person get together we’ve had since very early this year, and it is the just-confirmed, just-verified and ready to rock and roll financial event of this post-lockdown year.

Today, we are cordially inviting you to our private, in-person “off the record,” financial summit sponsored by the Investment Club of America. This confidential meeting will take place on Nov. 6-7 (right after the elections) in an undisclosed location in Las Vegas.

Why is this gathering so secretive? Because our First Amendment rights are being abridged by power-hungry politicians, and we need to maintain a low profile in an era of big government.

We live in dangerous times, in which our freedoms and wealth are threatened as never before. The November 2020 election has become the most important election of the 21st century due to the stark differences between the two parties. Trump and the Republicans are struggling to maintain power in the face of a never-ending pandemic. Their policies of tax cuts, deregulation and appointing conservative justices could be overturned soon.

As it stands today, the election betting odds still favor the Democrats. If the Biden/Harris ticket wins and the Democrats take over the House and the Senate, what will this mean for investors, entrepreneurs and the citizens of America? Will the stock market crash and gold soar?

Biden & Co. have promised massive tax increases on wealthy entrepreneurs, elimination of the long-term capital gains ‘break’ on stocks, bonds, gold, silver and real estate (with tax rates exceeding 50%).

They have also promised socialistic programs like Medicare for All, free college tuition, a New Green Deal, a wealth tax, severe limitations on free speech, a new Supreme Court, all on top of out-of-control government spending. The Great Suppression has begun!

That’s why we are holding this Post-Election Summit. It is critical to your pocketbook and your way of life.

And to help make sense of it all, we have brought together some of the world’s top experts to discuss the outcome of the November elections. What will it mean in terms of our citizens’ rights to speak out, to run our businesses, to invest, to travel, to assemble and to be left alone?

Will our freedoms and standard of living be curtailed due to new government policies? Will our wealth come under attack with new taxes, inflation and regulation? Will tech and gold continue to be the favorite stocks after the November elections?

We have brought out the best and the brightest analysts in finance, economics and politics to provide their analysis and answer your questions.

The Post-Election Global Financial Summit is an “in person,” face-to-face event – not a “virtual” conference. Due to legal restrictions, attendance at this in-person event will be limited. We urge you to register now and not be disappointed.

The price for this two-day event is $299. There are no discounts and we expect to sell out quickly. To learn more about the conference, go to https://globalfinancialsummit.co/.

After you register, you will be given the name and location of the Las Vegas hotel, and you then can reserve your room and make your travel arrangements. The hotel is only $99 per night, plus tax. There is no resort fee. Parking is free. We arranged a great deal for you!

Special Note: Please do not discuss this conference on social media. This is a private conference by special invitation only. Thank you.

Our Confirmed Speakers for This event:

Mark Skousen, veteran editor of Forecasts & Strategies and the producer of FreedomFest, will analyze the impact of the November elections on the economy, the dollar, taxes and your wealth. He will give specific recommendations — what to buy, what to sell and what to expect in the next year for stocks, bonds, the dollar, real estate and commodities.

Jo Ann Skousen, associate editor of Forecasts & Strategies and director of the Anthem Film Festival, will discuss her greatest concerns for the future — the protection of the twin pillars of freedom.

John Fund, senior editor of National Review and the nation’s foremost authority on politics and elections, will assess the good, the bad and the ugly coming out of the November elections.

Sean Flynn, economics professor at Scripps College (Clermont) and principal author of the top economics textbook in the country, will assess the “New Normal” after the elections — how to survive and prosper in an age of higher taxes, growing deficits and more regulations. As the author of “The Cure That Works,” he will update us on the future of health care and the pandemic.

Jim Woods, known as the Renaissance Man, the #1 financial blogger in the world according to Tip Ranks, and co-editor of Fast Money Alert with me, will discuss his favorite investment strategies for 2021.

Hilary Kramer, editor of the popular 2-Day Trader, a talk show host and a graduate of the MBA program at the Wharton School of the University of Pennsylvania, will discuss how the November elections will be a “GameChanger” (the title of her most popular book that was #1 on Amazon this year and was also on the Wall Street Journal bestseller list).

Bryan Perry, editor of the prestigious Cash Machine advisory service, will offer his best post-election investment choices in high-tech and high-income.

Adrian Day, founder of Adrian Day Asset Management and the world’s top authority on global investing and mining stocks, will offer specific advice on the outlook for global investing, the dollar, and commodities, with specific recommendations from blue-chip miners to penny stocks that are likely to double or triple in the coming year.

We just confirmed Barbara Kolm, vice president of the central bank of Austria, who will give us an update on Europe. More speakers will be added soon and Roger Michalski, publisher of Eagle Financial Publications, will moderate.

Time is short, and now is the time to act if you wish to be part of this historic gathering. Attendance is strictly limited, so sign up today at https://globalfinancialsummit.co/.

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