Just wondering what everyone's plan is, for when/if we get a really really really big crash in all markets with general profound recession/depression. I am thinking in unsettled times, there might be a risk in short selling, or buying reverse ETFs, etc because the markets as we know them could simply dissolve. Go away. I know that "isn't possible", but I am thinking about physically holding a good chunk of the nest egg in gold. Yeah, buried in the back yard, 4 paces due North of the big pecan tree, in a mason jar, two feet down. LOL jk but not kidding about the gold. Who made out in 2008? What was the overall strategy? Would it work again? Did you hedge with real property and physical assets? I know nobody here was trading in 1929, but did the bears hang in there and ride it all the way down, and make out like bandits? Were there limits on shorting, imposed by the government or by the exchanges? Any forced liquidations of short positions? I think the bear markets brought about by Covid and Ukraine have taken a lot of pressure off the markets and it will be a couple of years before "the big one" is really something to be concerned about. Raised interest rates are about all we really will be concerned with, I think, barring another calamity. And okay, yeah, rising debt is an issue but I think the economy can carry it for a while longer. The conditions that the markets faced and the lack of oversight of 1929 just aren't there. Even the recent "crashes" didn't have what I would call a major effect on John Q Public. I wasn't trading, wasn't investing, and so I didn't even notice, though my pension plans took a face plant, due to irresponsible management not of my own. (Unfortunately fund managers get paid no matter what, rain or shine, and have little incentive to liquidate in favor of cash or bonds when the market is tanking.) Crash? What crash? I was still working, still earning, still spending and living large. No soup line for me. That wasn't "the big one", IYAM. But some day the other shoe could drop. Not "worried", but trying to put a plan together.
The market can only fall a few percent until its halted. You will have the fed telling they will print trillions if necessary. From there markets go up. Only real crash possible is hyperinflation. If that happens your money at the exchange won't matter anyways since if the USD has hyperinflation the entire world has it too.
You have to be able to adapt to changing stockmarket conditions. It is silly to avoid shorting stocks that are weak in a stockmarket that is crashing for instance. That is the optimum time to be make huge sums of monies in a short period of time. Understand that the big boys (hedge funds, banks, brokers, mutual funds) drive the major trends of the stockmarket. If the stockmarket is tanking and crashing, chances are good the big boys are shorting the stockmarket and a lot of stocks for that matter. It is in your best interest as a retail trader, to trade in the direction of the trend which is down so, you short the stockmarket as the professionals are doing so as well. Use only put options to short any stock and do not borrow shares of any company. Your risk to the upside, if it runs up for whatever reason, is unlimited.
People suffered in 1929. So 1 time in a 100. People didn't suffer in 2008. Those who bought $128,000 homes with no money down - moved back to being a renter Millionaires (on paper) who bought 10 $128,000 homes with no money down - moved back into their parents basement. IMO its silly thinking about low probability scenarios. But the more it doesn't happen, the more people think it will because .... it gotta.
when there is a super big crash, the lousy charting software will definitely freeze. the lousy trading platform will also freeze. the bid-offer spread will be horrific. The candlesticks will be extra extra long. You can't day trade unless you are in the trading house, and you have the state-of-the-art trading platform and charting s/w, and you have a powerful brain CPU and computer CPU. I will stop my day trading. I will go on holiday.
Every position has a stop in place to protect capital. This strategy kept me out of the 2008 and 2020 drawdowns.