No it isn't.
Poker provides simple evidence of this. Decisions in a poker hand can be made entirely based on probabilities and expectation, without "predicting" what the next card will be.
Or a venture capital example. If a VC allocates his capital across 10 potential startups, he will pick each startup because he likes the risk:reward profile. He may well expect to lose money on 7 out of 10, or even 9 out of 10, with the confidence that, over a statistically valid period of time, the home runs will make up for all the whiffs and then some.
Is this VC "predicting" which of the 10 will take off? No -- if he knew that, he wouldn't need to spread his bets. He may well say "I have no idea... that's why I made 10 +EV bets" (with +EV being delivered in aggregate, if the methodology is good).
Taking attractive risk:reward scenario trades with +EV expectation is the same way. It's not the same as prediction.
Okay dokey. Though as Specterx pointed out, you seem to be willing to take outsized risks based on some very fuzzy notion of what constitutes "hard evidence" at some point in future. Truth be told I have no idea what your risk is, but you speak in such a manner as to suggest it isn't really quantified.
When you do things like blithely assume that a correction, if it it comes, will only be "5 or 10%" it tells me we think about risk very very differently.
Once again you are talking about some hypothetical index trader. I am talking about my own trading -- as mentioned, our short book is more or less at breakeven risk now, because our shorts were mostly entered earlier, in positions where downtrends and breaks were confirming before the major indices break.
As for optionality, the contrast was between a trader who uses price action to keep risk points reasonably close, allowing positive exposure to fat tail distributions on the positive P&L side.
One could argue a long can do the same thing with a tight sell stop, except the case for being long here has been significantly degraded by situational dynamics.
You did indeed mention "what would prove the bull case wrong," but again you speak and write as if your risk points are either very far away or not in the market at all, which, to me, is not really quantifying risk in any meaningful way.
Value investors can talk in the same terms, saying they will change their mind "when evidence calls for it" and meanwhile sinking deeper and deeper into value traps. That isn't quantified risk.
What? I didn't say it was a mistake for you to do anything. I don't recall advising you as to what to do... and as for gold, I never predicted what gold would do per se. I voiced the strong opinion that gold was a very lousy risk:reward proposition from the long side, and overall I am still biased that way (given the way gold is acting -- we remain short FCX from higher levels with confirming price action today).
Ok. Now you are talking in quantified risk terms about a specific market (and possibly a specific position). You are also laying out specific price levels as to what your definition of "a bear market or correction" means.
But this is different than all the stuff you were saying before, re, changing your mind when evidence appears of profit margins contracting, not worrying about a correction that will "only" be 5 to 10%, and so on and so forth.
As for whether it's a good risk:reward scenario, I still think it's a shitty one, but that's a different discussion... and I don't recall saying anything about "hail mary" either. My main points previous were in respect to blithe acceptance of tail risk, which were highlighted mainly in response to your very fuzzy intimations of what would make you sell (since shifted here with the introduction of some hard and fast price levels, which may or may not be on the mark, but at least represent something more quantified).
Again I think much of our disagreement comes from very different philosophical perceptions -- small differences but vital -- as to what the core of trading is and how markets work...