Financial Meltdown? – How to Profit Financial Betting in 2020

By in Industry Insight on
6 Minute Read
Stock Market Man Upset

If you’ve been paying attention to financial markets this week, you’ll know that the financial world is in panic mode. As the fear of the coronavirus spreads across the world, the Dow Jones Industrial Average has taken its worst beating since the financial crisis in 2008. Take a look at the monthly chart below.
DIJA Financial Chart

Could this be a sign that we’re headed for another financial meltdown of epic proportions? The jury is out of that right now, but it’s not looking great. I’ll talk you through what some of the experts think and how you can bet and profit on the markets no matter what happens.

What Has Caused This Mass Selloff?

Before we get into the reasons why investors have been bailing out of stocks, let’s look at some of the worst-hit markets in the past month.

  • Global stocks are cratering. Most major stock indexes are down 10% or more. 20% is officially bear market territory, and if we cross those lines, we haven’t seen anything yet.
  • Crude oil is down from its high of $55 in early February to just about holding above $41 now.
  • S. Treasury yields are in freefall. The interest rate on the 10-year bond is 0.76%. This is because investors are buying up this safe asset to ride out the coming storm.

What does all of this mean to you and me, humble gamblers sniffing around for easy profits? It means that a crisis may be on the horizon, and while that might be bad news for your stock portfolio or pension in the short term, I’m going to show you how to profit from whatever happens next.

But back to what has caused this. Why, in the midst of what is supposed to be an extremely strong global economy, has this mass selloff happened?

First, the coronavirus is spreading fast. People are panicking that the economy may tank as people stop going to social gatherings, as governments quarantine entire regions, and as global supply chains fracture. Think about it. If you’re a small business that needs parts from China and Chinese factories aren’t open, this could pose a major problem.

Also, people are beginning to worry that the stock market may be in a bubble. Central banks have been printing money at low interest rates since the last financial crisis. Many financial commentators are on the record saying that stocks are way overvalued.

Mainly, this selloff has been driven by coronavirus hysteria. Nobody seems to be able to control this virus. Even if it’s not as lethal as many originally worried it might be, it’s wreaking havoc in the business world. Airline and travel stocks have tanked, and as one sector of the economy gets hit hard, a domino effect occurs.

How Can Gamblers Make Money From This?

To make money from this situation, you’ll need a financial betting account. One of the top UK gambling sites offers financial betting. Visit Betfair and click the “financials” tab on the main menu to get started.

Once you’re set up with an account, you’ll have access to betting on world markets. Betfair offers lots of financial betting opportunities. It’s one of the best platforms I have seen, and you’ll feel like Gordon Gekko soon after you log in.

Financial betting works a little differently to sports betting. You don’t place wagers in the same way. Let me give you an example of a financial spread bet to help you understand how it works.

This is only one type of financial bet, but it’s the easiest, and it’s the main one that Betfair offers on its financial platform.

Let’s say that in the middle of next week, things are still looking bad. You decide to bet against the UK FTSE100 stock market because you believe it will continue falling.

It’s simple enough, isn’t it? There’s nothing complicated about financial betting. That’s why it is growing in popularity in the UK and elsewhere. It’s also free from capital gains tax, so many people prefer it over buying and selling stocks.

Remember, you can bet both ways. You don’t have to bet against the market. You might be of the school of thought that the global economy is doing very well and that this is just a temporary blip on the radar. If so, you can buy the market instead of selling it, and earn money as it goes back up.

Which Financial Markets Can I Bet On?

Financial betting is a whole new world to some. It can seem confusing in the beginning, but it’s simple underneath all the tickers and charts.

You can bet on the price of:

  • Stock markets like the UK FTSE100.
  • Stock prices of companies like Apple.
  • Commodities like oil, gold, or wheat.
  • Currencies like the GBP or USD.
  • Cryptocurrencies like Bitcoin.

The latter category is very interesting right now. Bitcoin is likely to be one of the first things that people sell in a financial crash. It’s not really something people need, so if jobs start to go and people start to fear the worst, you could make money betting against Bitcoin. Again, you can do this on Betfair.

If you don’t want to create a Betfair financial account, you can use the standard Betfair exchange to wager on the price of Bitcoin.

Here are the current odds on Bitcoin on the Betfair exchange for March 2020:

Another great bet you can make on the Betfair exchange is on central bank interest rates. We already saw the US Federal Reserve reduce interest rates last week in an attempt to stimulate the markets. After all, cheaper interest rates mean more people will borrow more, which should lead to the economy growing, right?

The next announcement is scheduled for March 18th. Here are the odds on the various possibilities.

Betfair US Interest Rates

US President Donald Trump is applying a lot of pressure on “The Fed” to cut rates further and buoy the stock market. However, upon the last announcement of a rate cut last week, the market dropped further. It clearly didn’t work. Some people see the rate cuts as the US government panicking, which does not give the market confidence.

Do you think Trump’s pressure campaign will work? If so, bet on them reducing interest rates on March 18th. Do you think Fed Chairman Jerome Powell can stand up to Trump and hold interest rates steady to gain investor confidence? Then, bet on them remaining unchanged.

I’m not telling you what to bet on. I’m not a financial advisor. It’s your money, and it’s your call. I’m just trying to help you see the possibilities to profit no matter what happens next.

So, What’s Likely to Happen Next?

That depends on who you ask. The truth is that nobody knows for sure. As always, in the world of financial markets, there is a diverse range of informed opinions.

Some optimistic financial bettors are viewing this as a temporary crisis that will settle down when the fear about the coronavirus subsides. Some are even buying real stocks and shares at what they see as a discount.

Others, like notorious stock market sceptic Peter Schiff, who called the 2008 housing bubble, say that this is only the beginning of a much bigger crash. On a recent podcast episode, he likened the coronavirus to a pin that pricked the bubble. It doesn’t matter what happens to the pin now, he claims, because the bubble has been pricked and it is losing air.

While they’re interesting, these opposing opinions don’t help us decide what way to bet. We can only guess. Here’s what I will be looking for:

  • If the coronavirus spreads faster and further, I expect the fear to ramp up and almost all assets to continue to sell off.
  • However, if any major news of a vaccine or breakthrough towards one is released, I expect stocks to bounce back. Likewise, if the new cases of the virus start to taper off.
  • I expect “safe haven” assets like gold to increase in price if things get worse. In the last financial market crash, gold almost tripled in value.
  • I expect the US Federal Reserve to cut interest rates at some point. This will weaken the dollar against other currencies and will cause US Treasury bond yields to fall further, at least until other central banks follow.
  • I’ll be keeping an eye on where major coronavirus spikes occur. If there are publicly traded companies in those areas, I will short sell them. For example, keep an eye on casino stocks in Las Vegas and watch for an outbreak there. Those stocks will drop hard if Las Vegas has a major coronavirus outbreak.

Financial Betting Tips

Before I wrap this up, I want to give you a few tips. These will help you stay safe when betting on financial markets in these tumultuous times.

  • Always use a stop loss – You decide how much you are willing to lose and place an auto-trade when the asset you’re betting on reaches that level. You can even buy guaranteed stop losses for a small fee. Trust me when I tell you that it’s worth the money.
  • Open a demo account first – The Betfair financials exchange that I have repeatedly referred to in this post offers demo trading. This can help you get the hang of financial betting before you place real money wagers.
  • Remember to doubt yourself – Never be too sure when making financial bets. So many factors can impact financial markets. In time, you will develop a strong gut feeling for what is going to happen. However, don’t be overconfident. Never risk more than 10% of your bankroll on one trade.
  • Betting financials is a skill – Unlike many games of chance, your financial destiny is in your hands when you bet on financials. You can learn how markets work, read about them, and get better at betting on financials. It’s a skill. Just ask Warren Buffet if you don’t believe me.
  • Stick with what you know – Don’t trade currencies if you don’t understand them. I usually bet on companies and stock indexes like the FTSE100. They’re much easier to wrap your head around. Don’t go betting on oil price futures unless you’re a seasoned commodities trader.

And one final tip… Wash your hands as often as possible. This coronavirus is getting WILD!

Happy financial betting. I hope you make some money whether the markets tank or recover and rally to new highs. Maybe they will do both. Either way, you now know how to bet on and profit from it.

Oliver Hughes

Based out of London, I began freelance writing for the UK section of GamblingSites.org in October of 2019. Having worked in the gambling industry for over 10 years, I now have the pleasure of adding this site to my list of accomplishments as a casino writer. ...

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