Are Your 'Chaos Hedges' Ready?

On Wednesday night, Stansberry Research founder Porter Stansberry hosted an emergency briefing with one of the most well-connected insiders in Washington. We've called him the "Metropolitan Man."

They discussed sweeping policy changes that we could see this year – including tax reform – where they see the economy heading in the next few years, and where you should put your money.

A theme of the night was the possibility of market chaos. Now, longtime readers know that – overall – I'm bullish on the markets.

But you still need to protect yourself from a bear market. It will come... eventually. The best way to prepare is to have a portfolio that can also work defensively... And that's why for years I've recommended people hold what I call "chaos hedges" in their portfolio.

Here's what the Metropolitan Man said about one of my favorite chaos hedges during the briefing...

I'm still long gold. I don't think it should be 100% of anyone's portfolio, but I think it should be an important part. We live in very risky times and times when printing money has become a very popular thing for governments to do and you have to find some way of hedging yourself against that and gold is part of that strategy.

Of course, while gold can help protect your portfolio, there's a chaos hedge with even more upside. I've called it the No. 1 way to speculate responsibly in 2017.

Right now, there is an exceptional opportunity to "buy low volatility" near the later stage of the market's long bull market run... If Porter and the Metropolitan Man are right with their prognostications, it will make people small fortunes – upwards of 10 to 20 times your money.

We can't give what was discussed on the briefing away... But if you missed Porter's emergency briefing, click here to access it now.

Now let's get to the rest of this week's Q&A...

Q: Can zinc be toxic if a lot of tablets are taken? – E.M.

A: Yes. Zinc blocks the absorption of copper in our bodies. We need copper to make red blood cells and help our immune system. If you're taking zinc long term, add some copper into your diet through foods like nuts, beans, and seafood.

I'll take zinc when I feel a cold coming on. So if you're like me and only taking it while you're fighting off a cold or the flu, you don't need to worry.

Q: Do you recommend including dividends received in calculating our trailing stop losses? In other words, subtract cumulative dividends to date (per share) from the trailing stop loss amount since you have effectively reduced your basis in the position? – E.B.

A: When you're buying shares of stock, it's important to factor dividends into your trailing stop loss.

That's because dividend payments change the point at which you would have to close your position.

Let me show you an example...

If you're buying a stock for $10 and set a 25% trailing stop, you would sell the stock when the price falls 25% lower than $10 (down to $7.50). If the price moves to $20, your new stop would be $15.

Let's say you received a $1 dividend payment. All you need to do is subtract that $1 dividend from the highest share price – $20 in this case. Then you use that number – $19 ($20 minus $1) – to set your stop loss. So your stop would move from $15 to $14.25 ($19 times 75%).

As you can see, dividends give you a little more downside protection.

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Q: We know how much you love blueberries! Are the frozen as good as the fresh? Costco sells frozen blueberries for about $1.50 per pound – fresh ones often are four to [five] times higher. Would appreciate your input. Thanks! – L.F. and B.F.

A: How could I leave out my favorite fruit – blueberries? Often I freeze my own blueberries, but buying them already frozen – especially if it's saving you money – is fine. Multiple studies have shown that frozen blueberries actually have higher antioxidant levels.

The freezing process forms crystals in the berries that actually make the antioxidants easier to break down when we consume them... this is called "bioavailability."

So save yourself a few bucks and stock up on frozen blueberries.

Q: I'm under the impression I cannot trade options in an IRA account. – A.M.

A: You can trade options in an IRA account as long as they're fully "covered" – meaning you have the cash available for your total capital at risk. The government and your broker want to make sure you aren't leveraging your retirement too much.

I love selling options in an IRA... The extra capital you keep out of the hands of the taxman compounds over time and makes a huge difference in your long-term performance.

The easiest thing to do is to trade in a nontaxable account – like your IRA or 401(k) – and not worry about reporting the transactions... That really makes it fun to trade options, and it makes tax time easier.

Have trading tricks or tips you want to share? Send them to us at [email protected].

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Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Retirement Millionaire Daily Research Team
April 7, 2017