Your Next Great Trading Opportunity Might Surprise You...

Beware the fury of the patient man…

I’ve said it before and now I’m saying it again – a correction can be fantasticnews for patient investors and long-term traders.

So today I’m showing you how a big stock correction could play out in the coming weeks and months—and exactly where you could find the best deals when the dust settles.

I’ll tell you now, you might be surprised by where those deals will be found…

Ever put a hot new stock on your watch list only to see it jet higher? You waited to scoop it up on the dips – but there were no dips to buy. So you just forget about it. That’s what happens in a raging bull market.

Well, don’t worry, you’ll be getting a second shot at substantial gains soon enough. During a correction, even the most seemingly bulletproof companies get the back of the hand. And that gives you the perfect opportunity to buy superior stocks that passed you by the first time around.

Corrections and bears markets are part of the deal. Simple as that. If the stock market never dropped, there’d be no risk. And guess what? No risk equals no reward. Corrections till the soil for next year’s crop, even if they sometimes ruin your end-of-summer beach vacation.

So let’s map out where we are right now. Global markets are sitting on a teeter-totter. The S&P 500 is down almost 7% so far this year. And you should prepare yourself to potentially see a lot more red. There’s a strong possibility that markets retest their August lows. If and when that happens, here’s how everyone will react…

First, the financial media will freak out (even though these same folks are now reminding us that selling long-term holdings is a stupid move when the market gets a case of the shakes). The markets will become front-page news. Again. It’s all anyone will talk about.

Outrageous predictions will follow. Folks who thought August’s squall was the worst of the storm will be the first to guess the market will drown. Investors will amplify every bit of bad news crossing their monitors. Depression. Bread lines. Hoovervilles. You get the idea.

But while your friends are getting their prepper bags ready, you’ll be ready to make fools out of them. That’s because you’ll know where to find gains after the rest of the froth has been scraped off the top of the market. They won’t.

So here’s where we’re going to find our next opportunities…

Remember those initial public offerings we’ve skewered this year?  Let me refresh your memory: I said the next time you’re tempted by a red-hot IPO, go shackle yourself to the basement floor until you think better of it. And I meant it.

After all, most IPOs are just cash grabs for up-and-coming companies and underwriters. The greedy bastards priced their IPOs way too aggressively over the past year or so. And now, their poor performance is starting to snowball…

IPOs Get Chopped

And sure enough, over the past three months, the Renaissance IPO ETF has dropped nearly 15% — more than doubling the Nasdaq Composite’s losses. Who can blame investors for dumping these overpriced new stocks? Not this guy…

Here’s what these investors are missing: the remorseless pressure of a correction could eventually transform some of these IPO lumps of coal into 18-carat diamonds…

“A look at U.S. IPO returns from 1999 to 2015 show that the best IPO outcomes for investors have come in years after an annual decline for the Nasdaq,” the Wall Street Journal reveals.

“The best year was 2012, coming after 2011′s 2% Nasdaq decline, in which more than 65% of IPOs produced positive returns, according to Dealogic and Factset data. The worst was 2000, following Nasdaq’s 44% gain, in which only about 20% of IPOs produced positive gains.”

And guess what? The Nasdaq is rapidly slipping into the red on the year. That will eventually create a lot of diamonds once the dust settles. According to the FactSet data, half of 2015’s new IPOs have delivered negative returns so far. As performance sours, speculators will continue dumping their shares.

Look, we’re looking at a correction here, not the beginning of a depression. And like I said, corrections are healthy for markets in the long run. They also give smart traders some of the best opportunities they’ll ever see, because the masses panic-sell out of even some of the best names on the market. For the smart trader, it’s like falling into a pile of cash. It’s almost too easy.

But many investors will sell. Not every trader has the stones to ride out the storm. If you want to crush the market, it all comes down to this question…

Do you have the fury of the patient man?

Regards,

Greg Guenthner
for The Daily Reckoning

P.SPatience, patience, patience. If you want to cash in on the biggest profits this market has to offer, sign up for my Rude Awakening e-letter, right here. Stop missing out. Click here now to sign up for FREE.

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