Post by Admin on Jun 3, 2022 8:45:21 GMT -5
You probably read/heard that you can't time the market. I used to think it too, until I learned how to do it.
Since I started doing it in 2013, I avoided all the big losses.
2013-2017: I didn't lose more than 3% for bond OEFs from any last top or more than 5% for stocks OEFs.
Since 2018: I improved my system and the results show that I didn't lose more than 1% for bond OEFs. I hardly trade risky stuff(stocks, CEFs, others) but when I did they all made money because I usually do them after huge declines and rebound.
It's not that difficult when you know the formula. Several have been doing it for years. The key is
1) I want to avoid the big losses. In most cases, I will be out for several weeks. I was out 3-4 weeks in Q4/2018, March/2020. I have never lost more than 1% from any last top since the beginning of 2018. Read (here).
2) I'm wrong sometimes, it's part of the system. But the trick is to stay out very short. Every time I was wrong I was back to be invested at 99+% in less than one week.
3) Be a flexible thinker, every situation is different. Until 2022, when the risk was high, I was out for 3-4 weeks each time. My record shows I have been out in cash about 10% = very high risk. 2022 was the exception, I was out for months from January to early Nov, and only ST trades were allowed. Why? Because most of the problems still existed.
So, how did I find the above? I thought I couldn't do it until I started looking, searching, and LISTENING which most people in general have a hard time doing. You read hundreds of lines, and you miss a simple nugget. I have heard many analysts because I just love investing, every blue moon someone says something illuminating. Then, I started practicing and actually trading. It's a process that took years to master.
First, you got to watch the big picture and decide if it's UNIQUE ENOUGH.
1) Early 2020, and especially 02/2020: Covid was raging globally? Unique? Of course, it was. I sold on 2/29/2020(here)
2) Early 2022, and especially 02/2022: High inflation, high prices (gas, oil, food, housing, vehicles), terrible supply chain issues around the world, war in Europe. The Fed screams it will raise rates by several % in the coming months. Unique? Of course, it was. I sold early in 2022, explained it (here).
3) The following was harder. Listen to what the Fed chair says and what the Fed is actually doing. The Fed raised rates several times in 2018. Unique? Of course, it was. The stock market taught the Fed a lesson.
4) In 2008, we had the MBS fiasco. I didn't practice my system.
BTW, if you look carefully above (+ the meltdown of 1987), you can see that the meltdowns didn't occur because of valuation and many other indicators that pretend to know the future. It occurred because of unique situations.
Second, look for high-risk in the market. When VIX is around 30 get prepared, that's your warning. Above 30, starts selling depending on the speed of the rise and how many days risk is high. The VIX is very important but I follow several other indicators to support my trading in/out. But, watch the VIX for a big daily spike.
Third, there is a saying in Wall St, the smart money is in bonds. When stocks go down, it's "normal" and part of their volatility, when most bond categories go down too, it's not "normal", so pay attention.
BTW, markets usually go down faster, the recovery takes longer, 2020, was unique. Most investors should know their goals+risk tolerance, and stay invested with hardly any trades, but I know several traders and all have been doing it pretty well. It can be done!!
Let's summarize:
1) Look at the big picture
2) VIX>30 (or a big spike). Get ready at 20. Watch carefully over 25.
3) Most bond categories + stocks don't work at the same time.
4) MOVE(bond risk) > 110. See MOVE at (finance.yahoo.com/quote/%5EMOVE/)
Basically, selling to cash only occurs in unique situations.
The above is about 80%, the rest, you have to figure out. I can't reveal my proprietary system, which is very easy to execute when you know what to do. You can't swim reading a book, you can't learn to trade from reading, you actually have to do it. It doesn't have to be all or nothing, you can use timing for only 30% of your portfolio, I use 100% after I got pretty good.
=========
MOVE: I checked it years ago and I could not prove it helped me and why I stopped following it, my link includes what have worked for me very well...but...I looked again and now I see that MOVE > 110 has a nice correlation to high volatility in bonds and in most cases, typical high-rated bonds don't do well.
On 3-2-2020 it was at 125 = sell everything = correct. The week before it was already over 110.
End of 02/2022 it was over 130 = sell and continue to get higher with some lower volatility.
Also at the end of 2007, it was over 130 and higher in 2008.
(www.tradingcenter.org/index.php/trade/equities/stock-signals/354-move-index-bonds)
Key Takeaways
The bond market tends to signal significant changes ahead of the equity market
MOVE is 'the VIX for Bonds, by having a history of solid signals regarding the sentiment of the bond market
MOVE can be used in conjunction with the VIX to define general market risk.
=========
Bottom line: I have only 2 simple options. If risk is very high, I mostly in money market and trade only for hours to several days. If markets are "normal" I'm mostly invested at 99+% and trade for weeks-months.
BTW, here is an example of what not to do (link) by someone who doubled down by selling stocks + shorting stocks
Since I started doing it in 2013, I avoided all the big losses.
2013-2017: I didn't lose more than 3% for bond OEFs from any last top or more than 5% for stocks OEFs.
Since 2018: I improved my system and the results show that I didn't lose more than 1% for bond OEFs. I hardly trade risky stuff(stocks, CEFs, others) but when I did they all made money because I usually do them after huge declines and rebound.
It's not that difficult when you know the formula. Several have been doing it for years. The key is
1) I want to avoid the big losses. In most cases, I will be out for several weeks. I was out 3-4 weeks in Q4/2018, March/2020. I have never lost more than 1% from any last top since the beginning of 2018. Read (here).
2) I'm wrong sometimes, it's part of the system. But the trick is to stay out very short. Every time I was wrong I was back to be invested at 99+% in less than one week.
3) Be a flexible thinker, every situation is different. Until 2022, when the risk was high, I was out for 3-4 weeks each time. My record shows I have been out in cash about 10% = very high risk. 2022 was the exception, I was out for months from January to early Nov, and only ST trades were allowed. Why? Because most of the problems still existed.
So, how did I find the above? I thought I couldn't do it until I started looking, searching, and LISTENING which most people in general have a hard time doing. You read hundreds of lines, and you miss a simple nugget. I have heard many analysts because I just love investing, every blue moon someone says something illuminating. Then, I started practicing and actually trading. It's a process that took years to master.
First, you got to watch the big picture and decide if it's UNIQUE ENOUGH.
1) Early 2020, and especially 02/2020: Covid was raging globally? Unique? Of course, it was. I sold on 2/29/2020(here)
2) Early 2022, and especially 02/2022: High inflation, high prices (gas, oil, food, housing, vehicles), terrible supply chain issues around the world, war in Europe. The Fed screams it will raise rates by several % in the coming months. Unique? Of course, it was. I sold early in 2022, explained it (here).
3) The following was harder. Listen to what the Fed chair says and what the Fed is actually doing. The Fed raised rates several times in 2018. Unique? Of course, it was. The stock market taught the Fed a lesson.
4) In 2008, we had the MBS fiasco. I didn't practice my system.
BTW, if you look carefully above (+ the meltdown of 1987), you can see that the meltdowns didn't occur because of valuation and many other indicators that pretend to know the future. It occurred because of unique situations.
Second, look for high-risk in the market. When VIX is around 30 get prepared, that's your warning. Above 30, starts selling depending on the speed of the rise and how many days risk is high. The VIX is very important but I follow several other indicators to support my trading in/out. But, watch the VIX for a big daily spike.
Third, there is a saying in Wall St, the smart money is in bonds. When stocks go down, it's "normal" and part of their volatility, when most bond categories go down too, it's not "normal", so pay attention.
BTW, markets usually go down faster, the recovery takes longer, 2020, was unique. Most investors should know their goals+risk tolerance, and stay invested with hardly any trades, but I know several traders and all have been doing it pretty well. It can be done!!
Let's summarize:
1) Look at the big picture
2) VIX>30 (or a big spike). Get ready at 20. Watch carefully over 25.
3) Most bond categories + stocks don't work at the same time.
4) MOVE(bond risk) > 110. See MOVE at (finance.yahoo.com/quote/%5EMOVE/)
Basically, selling to cash only occurs in unique situations.
The above is about 80%, the rest, you have to figure out. I can't reveal my proprietary system, which is very easy to execute when you know what to do. You can't swim reading a book, you can't learn to trade from reading, you actually have to do it. It doesn't have to be all or nothing, you can use timing for only 30% of your portfolio, I use 100% after I got pretty good.
=========
MOVE: I checked it years ago and I could not prove it helped me and why I stopped following it, my link includes what have worked for me very well...but...I looked again and now I see that MOVE > 110 has a nice correlation to high volatility in bonds and in most cases, typical high-rated bonds don't do well.
On 3-2-2020 it was at 125 = sell everything = correct. The week before it was already over 110.
End of 02/2022 it was over 130 = sell and continue to get higher with some lower volatility.
Also at the end of 2007, it was over 130 and higher in 2008.
(www.tradingcenter.org/index.php/trade/equities/stock-signals/354-move-index-bonds)
Key Takeaways
The bond market tends to signal significant changes ahead of the equity market
MOVE is 'the VIX for Bonds, by having a history of solid signals regarding the sentiment of the bond market
MOVE can be used in conjunction with the VIX to define general market risk.
=========
Bottom line: I have only 2 simple options. If risk is very high, I mostly in money market and trade only for hours to several days. If markets are "normal" I'm mostly invested at 99+% and trade for weeks-months.
BTW, here is an example of what not to do (link) by someone who doubled down by selling stocks + shorting stocks
