I was reading the following article and I must say I completely disagree with the author. https://seekingalpha.com/article/4331038-5-mistakes-i-wont-be-making-in-coronavirus-bear-market I see a few fundamentally wrong ideas in this article. The first is that once you sell, to reenter your strong businesses you need to pinpoint the bottom of a correction. Who says so? You might succeed or not in buying back near the bottom but in any case if you do it after a correction of 10% or more, to me, you are already a winner. The second is that the selloff we are seeing is not only due to fear, fear in fact is not a problem, the problem is that we are only at the beginning of this thing and many companies (even good, strong ones) are already being badly hurt. The third wrong assumption is that of the pandemic being temporary. I'm not suggesting it won't be temporary, what I'm saying is that a 2 months pandemic is one thing while a 4-6 months one is a completely different thing (i.e. how long will it take to completely remove all limitations and get back to normal?) . If you were able to go cash before the crash, I believe picking the moment to reenter the stock market won't be so complex this time. The stock market will probably keep a down trend until numbers show this thing is finally regressing. What's you opinion? sm
Just follow Mr. Buffet's advice and invest on those strong stocks that you don't even have to look at them for 10 years. The strongest stocks are always bounced back in a much faster rate and reach new high one after another . Like last Friday, these stocks surged more than 10% in a single day, NVDA, MSFT, BRKB, AAPL and PG that are all in my long term portfolio. Day trading is a complete different story.
I complete agree but my question remains, if you were able to sell with profit when something like this is building up (and this is everything but just a correction) does it may sense to remain invested? Or would it be better to sell with profit, let the market move down and buy again without pretending to perfectly time the market? sm
In both cases it would take, of being an unique 1%/5%-er pro veteran or else - one from 95% of the idiots, who imagine that they can predict the market. The Market - that has been in the longest run, from time to time saved by printing more greens, impacted by tweets, recently went up based on illusionary earnings and felt down for a - fake virus. Not the best of chances, on predicting anything in a market like that. Why not to hunt for low caps instead, like IRBT, or even better,large caps like CGC, and pick them up for the long run, after they loose 50%-70% for no clear reason. Sell them in good times and when the crap hits the fence, to ask yourself, - how can i get even more money, to buy everything around me ? People talk about Japanese dooms days coming to US, haven't checked JPN top 100 (gona do tho, became curious as im writing), wouldn't be surprised, if the fundamentals, haven't moved that much.
It is a hard question to whether remain invested or sell when market is going to be down big. My strategy is to reduce the exposure when you sensed the market is going to be down for a while and a big retreat is in play, so you put some into cash; for example, when the SPX500 is down about 25% from its peak recently I was only down about 9%, so if the SPX would be down 50% like that of 2008, I would be down about 20% which I can tolerate, but when that happened the market would be rally huge as the economy is much stronger than that of 2008. Another strategy was when a certain stock goes up huge, like TSLA in the last few month, I gained a profit about $26000 with only 100 share, then I just use the profit to hold the shares and in this way, I always in profit on TSLA unless it went to zero, than I am even. With that, you don't really care the price fluctuate, because you don't lose, only win more or less. Completely withdrawal from market is not a good strategy, for example, in the last couple of weeks, a few of the stocks I own would rally 10% to 18% in a single day, you would not want to miss that.
Yup, the most overbought/skyrocketing positions would be liquidated partially (or not?) Still on TSLA, (that's naive to say for me) - if i were you, i would have sold at least 20% - 30% of TSLA at 700$ - $800, while at $900 and $1000 complete overbought squeeze fantasy begun. Not sure that i get, may i ask the initial trade price of that 100 ? (unless your work in TESLA and in that case it's not the best thing to reveal it for you in public forum, so you can simply ignore this question)
%% Good points. And not sure I understand the big run on toilet paper. And a kid I worked @ a grocery store+ they always bought big loads of groceries before a snowstorm, but not toilet paper LOL
Of course, that's a useful psychological trick. In objective reality you're losing money by being long something going down. It's a bit similar to scaling into winning positions to let initial profits cover an exit so if it goes the wrong way. A criticism would be that you would make a tiny bit more unless TSLA skyrocketed (unlikely from current valuations).
Well, I was smart/lucky enough to understand this thing would end up affecting the entire globe and that damage to markets and industries would be vast. I started selling Friday Feb 21th and sold everything else still in profit on Wednesday Feb 26th thus saving all of last year's profits and I'm happy to have cash ready to reenter the stock market when news comes that this thing is slowing down or some effective medicine for the inflammatory process that covid starts has been found. I do hope this thing will all end with hot temperatures in 4-6 weeks. sm
many have decided to invest in gold to take care of their capital, the virus issue made more than one think that it is better to invest.