James Baker is an under-recognized historical figure.
He served in several important positions … including Secretary of the Treasury under Ronald Reagan and Secretary of State under George H. W. Bush.
Baker’s role in the 1987 stock market crash is one of his under-acknowledged accomplishments. On the Thursday before the crash, he hinted that the U.S. might let the dollar fall to pressure West Germany to lower interest rates.
The next day, the Dow Jones Industrial Average fell 110 points (4.7%). The following Monday, it crashed more than 500 points, falling 22% in just one day.
And this wasn’t the last time Baker would move markets…
In the early 1990s, Baker led negotiations with Iraq to avoid the first Gulf War.
I was a Lieutenant Colonel in the Air Force at the time. I was stationed in the SAC Underground Command Center on January 9, 1991. Baker held a press conference, and our hopes were high.
Then he dashed them when he said: “Regrettably, in over six hours of talks, I heard nothing today that suggested to me any Iraqi flexibility whatsoever on complying with the United Nations Security Council resolutions.”
We had the Financial News Network (FNN) on in the Command Center. (FNN was a predecessor to CNBC.)
As Baker said, “regrettably,” I saw the Dow sink. Within minutes, it fell more than 50 points (2.1%).
I remember thinking there couldn’t be anyone else in history capable of sinking markets with so few words.
Last week, however, I watched Mark Zuckerberg inflict significant damage to Meta Platforms Inc. (Nasdaq: META)…
META Crashes 19% After CEO Speaks
Meta’s CEO kicked off the company’s quarterly earnings call by highlighting his ambitious, cash-burning bets on artificial intelligence (AI) and the metaverse.
Despite better-than-expected profits and revenue, Zuckerberg devoted most of his opening statement to Meta’s AI models, virtual reality headsets, augmented reality glasses and the metaverse operating system.
These innovations are going to cost a lot of money. Investors didn’t share his enthusiasm.
META shares plummeted as much as 19% in after-hours trading — erasing over $200 billion in market capitalization.
This decline set up a special trading opportunity … one that wasn’t on most investors’ radars.
Now, META’s steep drop is not a buy signal. It will take months for Zuckerberg to prove he knows what he’s doing with the $40 billion he’s spending on AI and the metaverse this year.
The sudden drop also wasn’t an opportunity to short the stock or buy put options to benefit from additional declines. The rapid decline has already happened.
Instead, it was an opportunity to generate safe income from the stock.
Grow Your Account With Income Trades
When I saw the market open last Thursday, I knew it was unlikely META would recover quickly. I immediately reviewed options prices and found an opportunity in a credit spread.
A credit spread is an income strategy. It requires selling one option to generate the credit and selling another to protect against a large loss.
It’s not a popular strategy because it doesn’t deliver large profits on any single trade. However, over time, consistently winning profits can grow to be incredibly significant.
Last week, I alerted my Precision Profits subscribers to an opportunity in META that generated $67 per contract in immediate income. My advanced options pricing models showed a 94% probability we’d win on that trade — and we did.
META wasn’t the only trade we found last week, either. We captured two other income trades and have had dozens of these signals over the past year.
This income strategy allows us to profit from stocks whether they go down, up, or sideways — with a win rate that’s over 95%.
We have more earnings reports coming this week. We’ll have multiple chances to benefit from more income trades in the next few days.
Go here to learn how you can be notified of our next trade. But hurry — my team is closing the doors on this offer soon.
Until next time,
Mike Carr
Chief Market Technician
