The Danger of Market “Tunnel Vision”

Hey, Ross here:

How scared are investors around all this market uncertainty?

Let’s look at today’s chart for some answers.

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				<h2 class="elementor-heading-title elementor-size-default">Chart of the Day</h2>				</div>
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								<p><span style="font-weight: 400;">This chart shows the level of S&amp;P 500 puts being held by investors over time.</span></p>

As a refresher, a put is a type of option that pays out when the price of the underlying security – in this case, the S&P 500 ETF – goes down.

Many investors use puts as “insurance” against a drawdown.

Right now, put positioning in the S&P 500 is at record highs.

This means lots of investors are looking for protection against a crash.

This shouldn’t be surprising, what with the jitters around the AI bubble (which have not abated).

And now, with the Iran conflict, I expect even more investors will be rushing to buy puts to “insure” against a crash.

This is a fairly rational response – and there’s nothing wrong with it.

But as I explain below…

You don’t want to overfocus on downside protection.

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				<h2 class="elementor-heading-title elementor-size-default">Insight of the Day</h2>				</div>
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								<p><b>Overfocusing on downside protection can cause you to miss opportunities – don’t develop “downside tunnel vision”.</b></p>								</div>
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								<p><span style="font-weight: 400;">The last thing you want is to develop “downside tunnel vision” – even in times like these.</span></p>

Where you’re so focused on protecting your portfolio that you miss out on the opportunities.

Of course, these are volatile times, so we need to be selective.

But no matter what kind of market environment we are in, there are always opportunities.

For example, energy and defense stocks have been printing lately.

Insiders who knew about the Iran strikes beforehand could have absolutely made plenty of profits.

And while I personally don’t favor defense stocks in my own portfolio for ethical reasons…

I absolutely believe that during periods of heightened uncertainty, following the insiders is the smartest move you can make.

And we just developed a brand-new purpose built platform for following not just the corporate insiders…

But the politicians as well.

Yes, I’m talking about the corrupt members of Congress…

The ones who have no issue snapping up defense stocks – right before they “suddenly” go on to make triple-digit gains.