• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Fat Tail Daily

Investment Ideas From the Edge of the Bell Curve

  • Menu
    • Commodities
      • Resources and Mining
      • Copper
      • Gold
      • Iron Ore
      • Lithium
      • Silver
      • Graphite
      • Rare Earths
    • Technology
      • AI
      • Bitcoin
      • Cryptocurrency
      • Energy
      • Financial Technology
      • Bio Technology
    • Market Analysis
      • Latest ASX News
      • Dividend Shares
      • ETFs
      • Stocks and Bonds
    • Macro
      • Australian Economy
      • Central Banks
      • World Markets
    • Small Caps
    • More
      • Investment Guides
      • Premium Research
      • Editors
      • About
      • Contact Us
  • Latest
  • Fat Tail Series
  • About Us
Latest

Investing in a Volatile Market — Two Strategies for When Volatility Bites

Like 0

By Callum Newman, Tuesday, 22 September 2020

Dear Reader,

Hi there! It’s your new Daily Reckoning Australia contributor here. My name is Callum Newman.

I must admit something. I’m not so new. I began contributing to The Daily Reckoning Australia way back in 2012!

What’s going on? For about two years I was writing a similar daily email called Profit Watch.

Your chief editor Shae Russell and I decided to merge them together to (hopefully) create the best investment newsletter in Australia.

You might know me already. If not, nice to meet you! I’ll be covering the markets at least two days a week for you.

Don’t worry! You’ll still be hearing from your regular cast of characters like Jim Rickards, Nick Hubble and, of course, the star of the show, Shae.

Enough about me…what’s going on where it matters? A big old down day in the US of A, that’s what! US markets tumbled overnight. So did iron ore, gold and oil.

Hmm. I know what you’re thinking. This bubble is popping. And it very well may be. But a few down days don’t necessarily make it so.

[conversion type=”in_post”]

The tech bubble of 1999–2000 is notorious for five — yep, five — drops of 10% before it finally peaked in March 2000. You could have been wrong-footed multiple times, and the same is true today.

I’m less confident calling the US markets down than I am Australia. The big US tech stocks may be overbid but you can’t deny their powerful business models, huge cash hoards and earnings potential.

What do we see instead when we look at Australia? Iron ore miners and banks drive most profits in corporate Australia. That’s not quite the same position of strength as the US.

The Aussie banks are looking decidedly weak, whether you’re a fundamental investor or a technical analyst. I just can’t get excited about the banks.

And can we trust the price of iron ore? I’m not sure on that but clearly the market is suspicious. Rio Tinto Ltd [ASX:RIO], BHP Group Ltd [ASX:BHP] and Fortescue Metals Group Ltd [ASX:FMG] all topped out before the recent iron ore tumble back under US$120.

We’re in for a volatile time. I told my paid subscribers the other week to expect this type of volatility. It’s important for your investment strategy.

For example, momentum and breakout trading styles will tend to break down in this type of market.

Volatility is the opposite of a trend. That means that kind of trading is likely to result in a lot of stop-losses being hit.

Two Investment Strategies for a Volatile Market

There are two approaches I favour here. One is accepting the volatility as inevitable but positioning for specific stock catalysts regardless. This means you are not relying on the general market lifting for this to pay off.

The second is to look for businesses you’re happy to own for the long term. I’m talking at least two years here. The general market is likely in for a wild and rough ride over the next 12 months.

We could certainly see another bout of sustained selling like we saw in March. But capitalism and company profits don’t ever disappear forever…only investor sentiment and psychology varies wildly over time.

And of course, the Aussie market is rich with stocks unhinged to the general economy.

You don’t need to know what the GDP figures are or the outlook for retail sales when you’re assessing a gold stock. What matter are how many ounces they have in the ground and the cost to get it to market.

A hell of a lot of money has gone to finance gold exploration lately. That spending is going to show up in drill hits.

This is true of other metals too, even if the dollar figures are on a smaller scale. Case in point: give a stock called Chalice Gold Mines Ltd [ASX:CHN] a Google later today.

It’s highly likely to be up a lot. They went into a trading halt last week and have announced a significant new anomaly at its Julimar project in Western Australia (I’m not saying buy it, by the way).

Chalice is having an extraordinary year.

What’s even more extraordinary is its exponential rise began close to the total low point in Aussie stocks in March.

I love that. It just goes to show an extraordinary stock can trump even the worst general economic news and circumstances.

That’s why mining stocks should be on your radar. The traditional blue chip portfolio looks like a ticket to nowhere in 2020.

But some strategic speculations can carry you forward. You won’t get them all right…but you only need one Chalice to cover a few missteps.

The obvious place to start is the gold sector. This is the point you need to leave me and go and listen to what Shae is saying on gold now.

Best wishes,

Callum Newman Signature

Callum Newman,

Editor, The Daily Reckoning Australia

PS: Stay up to date with the latest investment trends and opportunities. Click here to learn more.

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

Comments

Subscribe
Notify of
guest
guest
0 Comments
Inline Feedbacks
View all comments
Callum Newman

Callum Newman is a real student of the markets. He’s been studying, writing about, and investing for more than 15 years. Between 2014 and 2016, he was mentored by the preeminent economist and author Phillip J Anderson. In 2015, he created The Newman Show Podcast, tapping into his network of contacts, including investing legend Jim Rogers, plus best-selling authors Jim Rickards, George Friedman, and Richard Maybury. He also launched Money Morning Trader, the popular service profiling the hottest stocks on the ASX each trading day.

Today, he helms the ultra-fast-paced stock trading service Small-Cap Systems and small-cap advisory Australian Small-Cap Investigator.

Callum’s Premium Subscriptions

Publication logo
James Altucher’s Investment Network Australia
Publication logo
Australian Small-Cap Investigator
Publication logo
Small-Cap Systems

Latest Articles

  • China’s Game of Commodity Chicken
    By Charlie Ormond

    When commodities become weapons instead of just market goods, traditional investing rules break down.

  • Ride Mining’s Profitable ‘Curve’ this Way
    By Callum Newman

    All week we’ve been on a mission. We’re unpicking the dynamics around gold, and gold stocks. Here’s a bit of advice on this opportunity,

  • Silver & Platinum Squeeze Higher
    By James Cooper

    Cycle Turns: Silver and Platinum on the move… Is it their industrial or precious metal angle that’s getting investors interested?

Primary Sidebar

Latest Articles

  • China’s Game of Commodity Chicken
  • Ride Mining’s Profitable ‘Curve’ this Way
  • Silver & Platinum Squeeze Higher
  • One forecast for gold: 10k per ounce!
  • Three men, $20.8 million, and a $230 million rally… all in a day

Footer

Fat Tail Daily Logo
YouTube
Facebook
x (formally twitter)
LinkedIn

About

Investment ideas from the edge of the bell curve.

Go beyond conventional investing strategies with unique ideas and actionable opportunities. Our expert editors deliver conviction-led insights to guide your financial journey.

Quick Links

Subscribe

About

FAQ

Terms and Conditions

Financial Services Guide

Privacy Policy

Get in Touch

Contact Us

Email: support@fattail.com.au

Phone: 1300 667 481

All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

Fat Tail Logo

Fat Tail Daily is brought to you by the team at Fat Tail Investment Research

Copyright © 2025 Fat Tail Daily | ACN: 117 765 009 / ABN: 33 117 765 009 / ASFL: 323 988