Today’s videos is a follow-up to January’s post on how I’m managing the bear market.

Notes

Realities

1. I can’t dodge ever downturn. I can’t perfectly time the market. To a certain extent, I will suffer losses when the market rolls over.
2. Every hedging/risk-reducing technique that you might implement in a bear market has tradeoffs.
   1. Person who gets defense SUPER QUICK. SPY drops a few percent, breaks 20 MA. I get defensive.
      1. Pro: if the SPY ends up falling 20%, you won’t lose near as much because you got small so quick.
      2. Con: Most of the time, it’s a ruse. It’s the boy crying wolf. Since you got smaller so quick, when the market rebounds you won’t recoup losses as fast. 
   2. Person who waits for more damage before getting defense. SPY drops 10%, breaks 50 MA & 200 MA, breaks weekly support. I get defensive
      1. Pro: all of the false alarms along the way.
      2. Con: By the time it’s obvious the market is bearish. You’ve already suffered quite a bit.

Depends on the type of trader

1. Short-term trader that doesn’t carry any long-term positions. Swing Trader (I’m out if the stock tanks)
2. Longer-term trader that does carry long-term positions. Position Trader/Investor (Long stock, Covered Calls, Boomerangs)

Ways to Adjust portfolio in a bear market.

1. Get out of all bull trades.
2. Enter bear trades.
3. Remain in bull trades but hedge via selling covered calls/buying puts.
4. Long-term positions: Hedge with covered calls and/or protective puts
5. Short-term positions: Get stopped out, or scale-in and try to manage my way to breakeven/smaller loss.

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Tales of a Technician: Beware the Strategy Merry-go-Round

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Tales of a Technician: The Bullish Case for Bonds

Tales of a Technician: Opportunity Cost of T-bills Revisited

Tales of a Technician: Warren Buffett and Dividends

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