Stock market news - will stocks go lower?
One of the advantages of being a trader and not an investor is that I don't need to make the crucial decision between selling and holding, as an investor this decision can make or break you. If you look at Vanguard Total World Stock (VT) on Friday it closed (including Fridays recovery) at the same price that it was back on 1st November 2017, wiping out over 14 weeks gains in just 10 trading days. A successful traders approach to the market is much more strategic that an investors and therefore more robust in volatile times that we are now entering. On Friday my portfolio P&L had small swings +/- 1.5%, I made very few adjustments to my deltas as I'm much more delta neutral than an all long investor. But a classic investor with an all long position portfolio would of seen his P&L % wildly swing on Friday lows to the closing highs probably throwing in the towel at the lows or even there broker closing the position due to forced margin liquidation taking you out at the worst possible moment. I heard so many stupid YouTube videos last week of investors buying the dip, they said they were doing their "Christmas shopping early" I wonder how they like their presents now that they have got them home and unwrapped them?. So my message is if you are passive investor you need to be more strategic as of this moment going forward. "Don't be a monkey!!"
Question by Danny Goldstar. Lucrum, your comment is compelling, how to make the switch to more strategic? like in the case of vrx, i think it will gain in the next few months, but i keep thinking, wow, all that debt, hard to survive in tougher times?. how does one not be a monkey?.
Awnser, Hi Danny, I don't usually answer postings as I don't have much spare time (I'm in front of my trading station now preparing for the US futures opening), nevertheless I wanted to respond to your query. The question your asking about is a subject that Sven could make 10 minute videos about for the next 5 years and still just scratched the surface, the rabbit hole is deep!!. Unfortunately it's not as simple as buying the VIX or any of the other VIX derivatives, studies have shown that this is overwhelmingly a losing strategy (cost of carry etc). Our education which consumes all of our youth is totally skewed on solely the gaining of wealth not the preservation, and likewise plenty of YouTube finance channels discussing the forma and few the latter. To conclude reach out and use all the free education that you can find online and great Amazon books on this subject and you will find the answers you seek, above all avoid the snake oil sellers. YouTube Video
The Manager, Fidelibus Lucrum, Pooled Investment Club.
