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• Earnings season is here, and Goldman Sachs has some money-making ideas.
• Their recommendations involve options trades on single stocks that are designed to capture potential gains in share prices.

 We all know the old adage: buy low and sell high.

That's exactly what Goldman Sachs recommends for stock traders heading into earnings season — except their suggested method involves options.

The focal point of their strategy involves identifying downtrodden stocks with strong fundamentals since they'll be the most likely to spring higher in the event of a better-than-expected report,

The firm says to buy calls — or bets a stock will rise — on companies with either buy or neutral ratings that have underperformed the S&P 500 by 3% or more in the two weeks ahead of earnings. Dating back to 1996, implementing this strategy would've yielded a 17% return, Goldman finds.

Getting further into the mechanics of the strategy, Goldman recommends buying one-month call contracts with exercise prices that are higher than where the stock is currently trading.

The bank's analysts have constructed a list of the 19 companies that best fit these criteria:

But the firm's suggestions don't stop there. They also offer up three specific options strategies for stocks they think could be more volatile than is presently priced:

• Buy GE puts expiring in November to hedge October 20 earnings and November 13 analyst day risks
• Buy WHR (Whirlpool) October 27 straddles for October 23 earnings and potential news from the International Trade Commission regarding the company's quest to stem competitor appliances from flooding the US market
• Put AMD October 27 puts for earnings on October 24

SEE ALSO: Red-hot earnings have traders the most bullish on banks in years — and that's huge for the stock market

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• Right after the stock market crashed on Oct. 19, 1987, Robert Shiller sent investors a questionnaire to figure out what caused it. 
• His research showed that trader panic was as culpable as the computer programs that worsened the crash, contrary to the government and many traders' conclusions.
• The same panic can happen again, Shiller wrote in the New York Times, and new technology can spread fear even faster.

 On the 30th anniversary of Black Monday, the Nobel prize-winning author Robert Shiller is reiterating his view of what really happened. 

Writing in the New York Times on Thursday, Shiller argued that the Dow's 22% plunge — its worst ever — was caused primarily by mass investor panic, not the computers they had set up to trade stocks. His conclusion is that this behavior could happen again.

Shiller highlighted research he published in November 1987, which contradicted the Reagan administration's conclusion. The government's Brady Commission said the crash was primarily caused by mutual funds meeting redemption orders, and institutional investors who used portfolio insurance — a program that systematically sold equity futures as the prices fell.  

"Ultimately, I believe we need to focus on the people who adopted the technology and who really drove prices down, not on the computers," Shiller wrote in the Times. He continued: "In reality, my own survey showed, traditional stop-loss orders actually were reported to have been used by twice as many institutional investors as the more trendy portfolio insurance."

In other words, Shiller's survey of investors showed that losses accelerated as traders panicked while watching the market fall; price declines led to more deliberate selling.

In his research paper, Shiller further argued that since portfolio insurance had been used before Black Monday, other factors must have been responsible for a crash of that magnitude.

He noted that a few issues were already on investors' minds, including concerns that stocks were overpriced, comparisons to the October 1929 crash, also known as Black Tuesday. 

Shiller's research paper concluded (emphasis added):

"The actual decision to buy or sell on October 19 seems to be only weakly related to interpretations of recent news events that investors rated as important: there was little difference between buyers and sellers on the importance rating that was given to news events. Respondents apparently did not have a clear theory how these past news events translated into predictions of market price movements on October 19, yet very many respondents still had predictions. It would thus be wrong to say, as many have done, that the market drop on October 19, 1987 ought to be interpreted as a statement of public opinion about some fundamental economic factor, e.g., that there is lack of confidence in the White House or Congress. At best, any such opinions probably played a role in the crash mainly as they affected the vague intuitive assessments people under great stress made about the tendency of prices to continue or reverse, or about how other investors will react to the current situation."

SEE ALSO: Everyone forgets the most important thing about the 1987 Black Monday stock-market crash

DON'T MISS: A Wall Streeter who started his career on Black Monday recalls the biggest one-day crash in stock market history

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• Private equity firms are attracting assets, with Blackstone, the biggest name in the industry, expected to see inflows of $100 billion in 2018 and 2019. 
• The bulk of that money is likely to come from big-ticket investors, but Steve Schwarzman, founder and CEO of Blackstone, is also focused on making the firm's investments more accessible to individuals. 
• The retail channel, which covers things like private banks and investment advisers, currently make up 18% of Blackstone's assets, but that could go up. 

Private equity firms are killing it.

The investment managers, which typically buy up companies in the hope of selling them for a higher prices years down the line, averaged returns of 13.5% before fees between 1998 and 2014, according to a recent study by CEM Benchmarking. That was above every other kind of investor in the same period.

Money typically follows performance, and so investors have been pouring funds into the private equity asset class in recent years.

Nowhere is this more clear than at Blackstone, the largest publicly-traded private equity firm, which said Thursday that assets under management had hit a record high of $387 billion. Credit Suisse analysts led by Craig Craig Siegenthaler are projecting $100 billion in inflows to the firm in 2018 and 2019.

The bulk of that money is likely to come from big-ticket investors, but Steve Schwarzman, CEO of Blackstone, also hinted at a push towards making the firm's investments more accessible. 

"The power of the Blackstone brand is perhaps best illustrated in the high level of demand we're seeing for our funds across different subchannels: including the wirehouses and private banks, independent broker dealers, the RIAs [registered investment advisers] and family offices," Schwarzman said Thursday on the company's third-quarter earnings call. "These channels and investors, by and large, have been under-allocated to alternatives within their portfolios, some dramatically."

To benefit from the level of increased interest, the firm now has: 

• 12 salespeople focusing on wirehouses (full-service brokerages)
• 10 focused on independent broker dealers
• Sales staff focused on private banks and family offices and multi-family offices. 

These channels, typically lumped together as retail, now represent 18% of Blackstone's assets under management, according to Schwarzman. He said the firm had major initiatives underway in this space, but he can't talk about them yet "because sometimes people copy what we do."

Retail covers a lot of ground. There's ultra-high-net-worth ($30 million or above), high-net-worth ($5 million to $30 million), accredited investors ($1 million to $5 million), and mass affluent (anything below $1 million). 

"We are optimistic on the retail opportunity for the Alts as the firms expand their focus to include not only ultra-high net worth but also the $1-5M investor range," Siegenthaler at Credit Suisse said. 

Blackstone might be the biggest, but it’s far from the only private equity fund coming for these retail investors.

Apollo Global Management, a major Blackstone competitor with $231.8 billion in assets, announced a similar push back in August.

"We’re investing in the marketing resources we need to attack retail [investors] in multiple ways," Apollo's senior managing director, Josh Harris, said on an earnings call last year. "We've always been great manufacturers of return. Increasingly, we are just now making those products available and suitable for retail, which is different."

A part of the challenge is educating financial advisers on the strategies. Joan Solotar, head of private wealth solutions and at Blackstone, said that 2,500 advisers had come through Blackstone Universities. "We're continuing to educate advisors and really develop a relationship," she said. 

"One of the big wirehouses we've been working with for several years, we looked at penetration there and even for those FAs who sell our product were about 20% penetrated," she said "When we look across the entire system, we are 5%. So I think the upside is quite significant."

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• UK government will consider cracking down on gazumping in order to streamline the process of buying houses.
• Gazumping is when a seller accepts a higher offer after they've already agreed to a sale.
• A government survey revealed that 69% of sellers and 62% of buyers felt stress and worry as a result of delays.

Do you ever get that gazumping feeling? Maybe you're a gazunderer?

Well, you might not be for much longer. The UK government has announced plans to crackdown on gazumping — when a seller accepts a higher offer from a new buyer after already agreeing to a sale.

Communities Secretary Sajid Javid has announced an eight-week review of the property buying process.

Javid said: "We want to help everyone have a good quality home they can afford, and improving the process of buying and selling is part of delivering that.

"Buying a home is one of life's largest investments, so if it goes wrong it can be costly. That's why we're determined to take action to make the process cheaper, faster and less stressful.

"This can help save people money and time so they can focus on what matters - finding their dream home. I want to hear from the industry on what more we can do to tackle this issue."

The government also released a survey of 2,000 recent home buyers, which revealed that 69% of sellers and 62% of buyers felt stress and worry as a result of delays.

The report also showed nearly half (46%) of sellers were concerned about buyers changing their minds after putting an offer down and almost a quarter (24%) would use a different estate agent if they had to do it all again. 

Almost a third (32%) of sellers and 28% of buyers were unhappy with the other party's solicitor, the Department for Communities and Local Government said.

The plans for a review, though, came under fire from Shadow housing secretary John Healey:"This is a government out of touch and out of ideas," he said. "After seven years of failure, ministers still have no plan to fix the housing crisis."

Alex Neill of Which? magazine, called the house-buying process "outdated and flawed".

"Buying a home can be one of the most stressful experiences in life, with sales often taking too long or falling through, with some consumers losing substantial sums of money.

"The government must put consumers first, ensuring that estate agents deliver a better service for both home-buyers and sellers and that the conveyancing process is simplified."

The call for evidence will run for eight weeks from Sunday.

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