I think most of us believe, given how long this bull market has been going, that a potentially huge pullback, and maybe a bear market, is probably not that far around the corner. Now, I know that most of you that trade daily are generally in and out of positions relatively quickly, so would not be holding onto positions for months, watching them drop in value. So I'm not talking about yall. I'm talking about the people who have a bunch of money invested, and want to avoid the next crash, but don't want to lose out on all the potential upside from now until then. What are yalls plans to avoid the crash? I was thinking of two things. One is a moving average type system. Even if, overall, it might not work as good as buy and hold, it might be beneficial given how extended we are. Maybe instead of a moving average system, just setting a "stop" point in the market when you will sell (or go short), and raising that over time slowly as the market increases. The other I've thought about is just drastically reducing the amount I have invested, and using leveraged ETFs to do this even more so, giving tons of buying power to pick up stock on the drops. For example, maybe I'd just go long like just 10% of my account value in a 3x long ETF (or maybe even better shorting 10% of my portfolio in a 3x bear ETF). This would allow me to essentially be 30% invested. Then I could say, OK, if there is a [60%] drop I want to be 100% invested, and thus be effectively at 300% invested, and still have some room to buy more on margin. Back into the numbers and just use a formulaic approach to buy more as the market goes down further. What are yalls thoughts on how to miss the next bear market but not give up all the upside from now until then? Thanks!
The trend is your friend. If you observe the 2008/2009 Housing Market crisis chart...you'll see just how evident that hindsight wisdom is. and that generally applies to all time frames...from the day trading, to a much longer investment time frame scale horizon. But it's not enough to simply trace and assume and follow trend lines relatively blindly. -- You have to semi-establish, loose, logical reasons in your mind...and expect and kind of wait for all of that to unfold, and verify it, -- then ride the wave of profits to your initial hypothesis, It's kind of like looking, and thinking about, Both sides of a wrist watch -- the frontal face, and all the mechanical gears hidden in the back. Or riding surfing waves...you don't just simply ride the waves you see near the beach...you kind of think about weather seasonal patterns and the ocean formation and biology. Monster Wave surfers in Portugal and Hawaii and Australia are aware of this. Think about things in a deeper, collective picture. But more importantly, it's 2018...High-Five` , 1998, 2008...let's all Make Trading Great Again, don't be an ET, elite trader...be an Extraterrestrial Trader. hoo-Wah!
You have great deal of maybes there. And to be honest, you are asking questions that those who are better than most just not going to answer. Start studying price action based on monthly charts for past 100 years and after doing much back testing, learn how to hedge. TADA
Oh geez. When the most serious response in the thread comes from lawrence-lugar I know its doomed. Bump for any thoughts!
I kind of find staring at people's faces...to be incredibly intriguing,... and complex, and deep and dynamic and fluid and of various viscosity. -- Kind of like the tale a chart's image line depicts. On the surface, they may seem...somewhat, relatively...simple and common and basic and logical and rational...but that's not always the case. and therein, lies the beauty and complexity and awe and wonder of it. I guess you can kind of say...it's part art, part science. I stare everyday at the Dow and SPY charts. I've become very visual. A keen astute eye on the micro and macro scale of things....things that have happened, are presently happening, and generally expecting to happen.
Take with a grain of salt...2 easy option ideas. QQQ $173.16 Buy QQQ on a dip...Real money (no margins). Do a covered call for Jan 2020 at about $200. If the market flops (30% drop) write another call in 2020 for way out of the money...Waiting for the market to return (if it's a long bear market). Pocket the call money and profit if it rises. Pocket the call money (and dividend) if it drops. At the same time...What if you bought a put QQQ for Jan 2020...Say the $150 or $155.?? If you really believe a 30% correction, wouldn't you pocket some money on that one too (if you truly believe)?? Am I talking about a long straddle?? But you would be using earnest money...
Better change How do YOU plan to avoid the next 2008 crash to How do YOU plan to profit from the next 2008 crash.