Aftershock: Protect Yourself and Profit In The Next Global Financial Meltdown, Second Edition

In the Long Term, the Key Is to Take Advantage of a Falling Stock Market and a Falling Dollar

Once inflation passes 10 percent and investors begin to seriously lose confidence in the dollar, stocks, bonds, and other dollar-denominated assets, it will be time to shift the focus from big protection to big profits. At that point, the stock market will be falling, and the dollar will be falling, relative to other currencies, due to rising inflation and high and rising interest rates.

Falling stocks and a falling dollar will create enormous opportunities to make money while other investors will lose their shirts. Such is the power of Rule Number One: having the correct macroeconomic view.

Smart Investing for a Falling Stock Market: Shorting Stocks Using LEAPS

We love LEAPS! Long-term Equity AnticiPation Securities, or LEAPS, follow Rule Number Two: Invest for the long term. In the case of shorting stocks, that means you should never short short-term; you should always short long-term. LEAPS do this perfectly by allowing you to short stocks for one- to two-year periods. However, it is important not to buy LEAPS too soon because you don’t want them to expire before the stock and dollar bubbles begin to pop.

LEAPS are long-term stock options. Most options are for much shorter periods of time. You buy put options when you want to short a stock, and you buy call options when you want to buy (or go long) on a stock. You buy LEAPS exactly as you would buy options, but the short-term volatility ...