How are you positioning for the eventual Market top?

Discussion in 'Trading' started by Sean McLaughlin, Mar 30, 2010.

  1. Cash and my precious metal plays.
     
    #101     Apr 7, 2010
  2. Gold is holding up nicely despite Europe selling off.

    If it holds new highs are soon ariving no doubt.
     
    #102     Apr 8, 2010
  3. Stocks don't bottom in unison. Just look at Oct 08 to March 09 for proof.
     
    #103     Apr 10, 2010
  4. As for the question of this thread - the way I approach it is to be mostly market neutral most of the time. Hedge longs with shorts (or index shorts, if I can't find any good stock shorts), and only take on meaningful market exposure when you have a clear and strong conviction on market direction, and the risk seems low relative to the reward.

    At least 80-90% of the time, I find it much easier to select a portfolio of 5-10 stocks that seem more attractive investments than the general market, and maybe 3-6 stocks that seem far worse investments than the market, than I do to select where the market is going in the next few few weeks, months or years. IMO the general indices only offer excellent trading setups a handful of times per year, and remember you are not going to catch 100% or even 75% of them. Running a hedged portfolio of multiple stocks allows you to employ stock selection skill without requiring timing skill, gives you far less risk than the general market, and yet you can still use timing on the rare occasions where it seems particularly favourable to do so.

    This seems a far better and more consistent approach than at all times trying to work out what direction the general market is going. It also means that in quiet or flattish years such as 1994, 2005, 2007, you can earn significant returns by concentrating on very sound or hot sectors whilst also betting against those that look unattractive, whereas just taking on index positions means you get an average of both. This means you will miss many of the best opportunities in stocks in any given year.
     
    #104     Apr 10, 2010
  5. What where your longs in 08 and how did they perform vs the indexes they belong to, GoC? Thanks.
     
    #105     Apr 10, 2010
  6. Great post.


     
    #106     Apr 10, 2010
  7. exactly. positioning seems foolish. planning isnt a bad idea however.
     
    #107     Apr 10, 2010
  8. Did you get their contact information? I am pretty sure this kind of guarantee is illegal, and you could turn them over to the SEC, whatever...
     
    #108     Apr 10, 2010
  9. Did you get their contact information? I am pretty sure this kind of guarantee is illegal, and you could turn them over to the SEC, whatever...

    If not, their phone# might be on incoming calls list of your phone for that day...
     
    #109     Apr 10, 2010
  10. tortoise

    tortoise

    #110     Apr 10, 2010