If stocks are “obscenely overvalued” – and most investors agree they are right now – where do you turn to make money in the markets? How about precious metals and currencies? Or shorting call options in VXX?
These strategies are working for Victor Dergunov, author of the Albright Investment Group service on Seeking Alpha’s Marketplace. He focuses on these types of investments in his service, but it’s more than that – he also looks at long and short investments in various sectors, including energy, along with ETF and options plays, hedging strategies and other methods designed to help preserve capital and reduce downside risk.
Of course, he shares these actionable, profitable ideas with his subscribers. Victor joined the Roundtable to explain why he’s a big believer in electric vehicles (EVs) – especially Tesla (NASDAQ:TSLA), how he’s putting market volatility (or the lack of it) to work in his portfolio, and what he thinks the Fed is likely to do for the remainder of 2017, as well as how they might react if sentiment starts to turn negative in the economy and markets.
Seeking Alpha: Looking at your content, you seem to be a little bit country, a little bit rock n’ roll – or in investing parlance, a little bit macro, a little bit currencies, silver and gold. Broadly speaking, what’s your investment approach? What’s appealing for you about currencies and precious metals, with a little bit of macro mixed in for flavor?
Victor Dergunov, author of Albright Investment Group: I focus on macro indicators a lot to get an idea where certain markets are headed short term. I am usually more focused on individual stocks, but with many stocks now reaching what I feel are obscene valuations, I try to find an investment in other places such as gold, silver, currencies and so on.
SA: Within those areas, are there specific data points or indicators you follow to help you determine which way the markets are moving and how to position yourself as an investor?
VD: Within the areas of gold, silver, and currencies, interest rates and future Fed policy play a big role, so I focus on those factors to get an idea where markets may be headed.
SA: What do you offer subscribers of the Albright Investment Group service on Marketplace? What can investors expect to get from their subscription, and why should they join the Albright community? What do they get that readers of your free content don’t?
VD: In the Albright Investment Group subscription service, we offer exclusive trading ideas and an insight into our trading strategies before we make this information available in our public articles.
Investors can expect to get high-level analysis and exclusive ideas regarding trading strategies that they may find to be very useful and profitable.
SA: You’re a relatively new author on Seeking Alpha. Understanding that your Albright Investment Group service is still somewhat in its early days – launched in May – what would you say to other, newer authors considering starting up a Marketplace service?
VD: I would say to have patience, have a plan, and try to approach this like a long-term business opportunity that will give you as much as you choose to put into it.
SA: You wrote recently that the sell-off in the dollar might be due in part to market perception that the Fed’s narrative about normalization isn’t being taken seriously. As someone who frequently writes about gold and the dollar, which are (obviously) sensitive to interest rates, what are your thoughts about the Fed’s plan to continue to raise interest rates into 2018 and how that might impact the markets you follow?
VD: I believe the Fed will provide one more rate hike this year in December and will continue to gradually normalize rates so long as the economy and the markets permit the Fed to continue, meaning don’t have any significant disruptions.
However, as soon as some negative shocks become apparent, in the economy or in stock markets, the Fed should come back to its extremely easy policy. More QE and other measures are likely in the future. If the monetary punchbowl is not introduced early in the next recession, the consequences will be very severe. In 1-2 years everything could look a lot different.
SA: In a recent article on oil (USO), you cited the potential “risks” to the sector due to an increase in electric vehicle (EV) offerings. What is your perception of market demand for EVs, and how much of an impact might that have on oil, oil producers and related stocks in the coming years?
VD: Market demand for EVs is huge and has the potential to be massive. It will be massive because it is the future and it is a better alternative in almost every way. The potential for massive demand is greater than most people realize.
The impact on oil could be huge and also much greater than anyone realizes. This could cause lower oil for much longer and certain companies especially tied to the offshore drilling sector could go bankrupt.
SA: Currencies and precious metals tend to lend themselves to more short-term trades, as those markets can be pretty volatile. That said, any opportunities you’re looking at long term, and if so, what’s the appeal?
VD: I am not looking at anything in stocks right now, as I feel we are close to a short-term top in this market. However, when a correction occurs, I would love to buy some shares of Tesla on sale. Other fast growing disruptive companies that are juggernauts in their arena such as Nvidia (NVDA) I would like to buy at lower prices.
SA: What’s the major story or stories you are following in the market for the rest of the year and into 2018? How are you positioning yourself?
VD: The largest story I am looking at is the extremely low VIX. It feels like nothing can disrupt the markets these days. Even a potential nuclear conflict with North Korea barely causes any volatility. I am watching to see how long this lasts, and how to profit from the absence of volatility, also, how to profit on the flipside, when volatility occurs.
SA: What’s your favorite investment idea in the market right now, and what is the story?
VD: My favorite trade right now, and frankly one that has been a favorite of mine for a few years now is to short volatility via the sale of call options in VXX. This has been an amazing trade that continues to be extremely profitable as VXX continuously decays. This trade will work until it doesn’t anymore; when that will happen only time will tell.
As far as an investment, I have to go with Tesla, just because I believe this will be a huge company – it may be one of the biggest companies in about 10 years. Therefore, Tesla, but at lower prices. On a correction of 5%-10% in the stock market, I would want to get in between $250 and $280. In a bear market, all bets are off on how low it can go. In my opinion, we could see TSLA trade under $200. In a severe recession, $130-$180 could be the ultimate low for the stock and I would be a big long-term buyer here.
Thanks to Victor Dergunov for joining the Roundtable to share his perspectives on the remarkably staunch VIX, the Fed and Tesla. As a reminder, you can check out his free content here, and if you’re looking for exclusive, actionable long and short ideas in stocks, precious metals, energy, ETFs, options, and more to help protect your capital and reduce volatility, consider a subscription to Albright Investment Group.
Follow the SA Marketplace account above and below to stay up to date on what’s happening in the Marketplace, including our regular interviews and roundtables and product updates. Authors are launching new Marketplace services weekly, and this is one of the best places to keep up to date on the latest and greatest.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Victor Dergunov is short Sept 15 call options in VXX.