Monday, November 5, 2018

Sold most of my stocks

Sold most of my stocks last week.  Just before the rebound : (

Reason was because both the S&P500 and Nasdaq Composite index fell convincingly below their 200 MA.

I still think there's a only a 1/3rd chance of a bear market - most likely this is a 10-20% correction.  But I don't want to take the chance.  If you think there's a 1/3rd chance of getting shot, you have to take action to prevent yourself getting shot.

The stocks I am holding now fall into three groups:
  • Stocks I am willing to hold for 10 years.  Buffet style.
  • Small speculative positions, where I don't mind losing the lot.  Small risk for big gains.
  • A market-neutral pair trade.

I'm spending my time developing a simple automated trading system.  I want to be able to trade the market without having a view.


GSP said...

I'm also struggling a lot with this, should one try to time the market or not? After A LOT of thinking and contemplating my conclusion, for me, is that I should not try to do that. The question has then been how to deploy the cash I currently have, which I also thought and contemplated a lot. So after this correction I decided to deploy my cash over the coming 2 years, split in equal monthly buying. It would be so ironic if the market pushed on another 2 years and after that collapsed :)

I'm rather hoping that the market will trade even lower over the coming 2 years and I average in at decently good levels.

Do write more about your quant strategy!

BlackCat said...

Thanks for dropping by. Its really tough to handle uncertainty. I think that for most value investors, "market timing" will be a result of not finding anything to buy.

The quant strategy looks promising but very tough to follow. More abt it soon.

Anonymous said...

The character of the US stock market has changed and is no longer a case of close eye, buy and hold from here. In Jan/Feb/Mar when we had a sell off, the 200 day moving average was still sloping upwards and most stocks were above the 200 day MA... now, the 200 d MA has started to slope downwards and only 49.9% of SP500 stocks are holding above the 200 day MA. So while we had some nasty sell offs in Oct, and a rally now, I am still not inclined to say that the worse is over... This recent bounce has been as fierce as the sell off in Oct however, it lacks volume and that means that the smart money names are not participating.

BlackCat said...

Hi Anon, since Trump's election the market has been like a dream...floating up and up. 2017 had no negative months! This is the first real correction. We'll soon see if the SPX 200ma is acting as resistance. My gut feel is that this isn't a big bear market like 2008, but who knows?

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