I'm going to mostly cash in Long-Term portfolio

[HeSaidSheSaid]

I think we'll have a big rally on Monday (basically, big moneys will try to smoke the bears out of their position).

 

[Overnight]

...

when I started following the market we would have months of sideways action, dull trading environments. Seems like now we are either going up at an unsustainable rate or down which gets gobbled up just as quick.

That all changed on Wednesday, when Powell turned traitor to the bulls. Dec 15th is the line in the sand. Not smelling too good.

 

[VicBee]

Also worth pointing out, a stock market crash is a reference point but a portfolio's performance drives the decision to got to cash or not.

Just watched the latest All-in-Podcast on YouTube (highly recommended):

Chamath: "Almost 500 stocks have fallen 30 to 40% in the last 30 days, but the stock market is still basically at an all times high."

That was my point. The market may not experience a crash, but specific sectors will/did.

 

[quin8670]

Have you considered hedging some of the risk with SPY puts? If you buy them with expiration date of 1 year away, and you buy them at a lower strike price than what the market is at based on how much of a draw down you feel comfortable with.

 

[qlai]

What is the reason for hedging? If you are in a long-term portfolio and believe that markets eventually rebound, then why hedge a temporary draw-dawn (assuming you are not over-leveraged)? I am talking about personal accounts, not managing Other People Money.

 

[nooby_mcnoob]

Bear/ correction territory durations seem to be getting shorter and shorter due to help from outside forces. Makes me believe we will just see many more corrections going froward, tighter quicker in nature. Maybe who knows.

when I started following the market we would have months of sideways action, dull trading environments. Seems like now we are either going up at an unsustainable rate or down which gets gobbled up just as quick.

Agreed. And I fucking love it.

 

[Cuddles]

Bear/ correction territory durations seem to be getting shorter and shorter due to help from outside forces. Makes me believe we will just see many more corrections going froward, tighter quicker in nature. Maybe who knows.

when I started following the market we would have months of sideways action, dull trading environments. Seems like now we are either going up at an unsustainable rate or down which gets gobbled up just as quick.

Probably due to growth of retail traders

 

[Zwaen]

What is the reason for hedging? If you are in a long-term portfolio and believe that markets eventually rebound, then why hedge a temporary draw-dawn (assuming you are not over-leveraged)? I am talking about personal accounts, not managing Other People Money.

you ‘save’ money and will be able to buy more at lower prices

 

[deaddog]

you ‘save’ money and will be able to buy more at lower prices

But doesn't hedging cost you money? At best you break even.

 

[Zwaen]

But doesn't hedging cost you money? At best you break even.

Hedging can give a lower drawdown. If your profit/drawdown ratio increases you can make relatively more profits by risking more.

Suppose your capital =100. In 1 year you can make 12 and from historic perspective you estimate your max drawdown = 50. You can set up an hedge which costs 4 and this reduces max drawdown to 33. You can use now 150 capital and earn 14 ( 12*1.5 - 4) while your risk - max drawdown - will be the same.

But I certainly agree just blindly buying puts for indices is a losing strategy (unless you have perfect timing ability)