DOW & S&P at all time highs

Working from memory on this board, people moved to cash at 15,000, 16,000, 17,000 and 18,000.

Someone will eventually get it right.

Buying puts for insurance here is the credited answer IMO.

But staying aggressive in my 401k/IRA.

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Working from memory on this board, people moved to cash at 15,000, 16,000, 17,000 and 18,000. Someone will eventually get it right.

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True. It will be the person who starts moving to cash within a 5 to 7 year window, in phases, prior to retirement, locking in profits at the usual times of year.

NOT the cowboys that try to time the market and end up chasing. The market, collectively, has been scientifically proven to be smarter than all of us over time. If you have higher risk tolerance, specific knowledge or do some intense research in various growth/evolving sectors, you CAN beat the market - for a while. Ditto for chronic bears who short everything and always pull down recoveries (and, make recessions worse). But, in the end, the market rebounds in a fairly predictable fashion.

Dollar cost averaging is your friend. It magically takes the work out of trying to time the market.

I exchanged some money in my IRA stock mutual fund to my IRA bond mutual fund. But, that was just to rebalance based on June 30th statements.

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All anecdotal. All worrisome. By the way, VIX calls would be cheap today if you're a conservative investor, and like to insure downside without putting too much cash on the sidelines.

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Explain this to me. Im a real novice that is eager to learn.

If I wanted to convert to VIX, what stock tickers could I buy? RobinHood doesnt show VIX.

i am going to edge out in August (probably about 10% of my net worth) and sit on the sidelines until after the election, or its clear who is going to win.

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Dollar cost averaging is your friend. It magically takes the work out of trying to time the market.

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Agreed. I'm generally conservative and don't care for trying to time the market, but dollar cost averaging allows me to keep my conservative philosophy while stepping out of my comfort zone and try for better returns.

Not putting any more in but not taking it out either.

Well I can tell you where I stood last fall, and where I stand now.

At the end of October 2015, the S&P 500 closed at 2079.36, and that's when I was completely out of the market and starting to explore options for shorting it. My operating thesis was that the market would drop below 1800 by late summer 2016. However, I never pulled the trigger on shorting the market.

Having reached a high of 2134.72 on 5/20/2015, the market did drop all the way down to 1810.10 on 2/10/2016. I was following the mainland Chinese markets pretty closely at the end of last year, and in January I started a thread looking for the bottom in AFTY. Then later in March I started a thread observing the global commodities bottom that had already occurred in late January.

So the Chinese-based global commodities bottom has already happened. The huge drop in recorded corporate profits is already (mostly) in the books. What else bad news is there to make the market drop? I don't know.

When the market closed at 2119.12 on June 8, then I started exploring SPX put options once again, and even put in an order to buy several contracts... but it was a limit order that never executed. So I stayed on the sidelines, passing up a second opportunity.

Now here we are yet again, with a frothy upswing, and the market closing at 2152.14 on July 12. So over the past 14 months, the index has gone up 0.82%, and in the 8.5 months since I started exploring shorting options, I have missed out on a 3.50% rise in the index.

Honestly, I'm getting pretty close to throwing in the towel on my original thesis of the market dropping below 1800 before the end of the summer. Global commodity prices cratered, and it didn't matter. Corporate earnings continued to slump below analyst expectations, and it didn't matter. What more is left to trigger a market selloff?

On the other hand, looking at the bright side: (1) missing out on a 3.5% rise is hardly a terrible thing; (2) 10-year investment return prospects for the S&P 500 index still look horrible to me, and there is good empirical evidence to back that up.

Consider this: In Sep 2014, 12-month inflation-adjusted corporate earnings stood at $106.94/share, and the market index closed that month at 1972.29. Currently, 12-month inflation-adjusted corporate earnings are probably somewhere below $80/share, and yet the index is 9.1% higher now. That seems like an imbalance.

And what causes imbalances? Typically a strong dollar pulling foreign investors into the relative strength of U.S. assets in both equities and bonds. This is what happened in the late 1990s. Thus, when you look at what the dollar has done the last two years, you see that it's risen about 20%. Investors fear Chinese recession. Investors fear EU recession. Some investors even fear trade repercussions causing a UK recessions. So we see a lot of flow into the U.S., but that tide will have to reverse itself eventually. (If only the U.S. economy could grow 26% per year like Ireland's did in 2015.)

I no longer have a good working theory of what might trigger a market selloff (except perhaps for a strengthening of the GBP and/or EUR versus the USD), but given an analysis of fundamentals, I am once again researching SPX put option prices. This time I will put more emphasis on developing clear rules for guiding my entry and exit points with a net short position.

SPX 1750P expiry $15,350 outlay. Equity put. Expensive.

Buy outright the March 2017 VIX for $20,550, and forget margin calls. Futures contract. No margin, plenty of time to unload at a preset loss or gain.

Or buy and roll forward month VIX calls, each and every month. Some residuals left over to offset the roll cost. So December 21, 2016 is the highest cost, and farthest out you would go. $295 a contract.

Have to buy SPX, not SPY. Equity index put European, very expensive, and you could be dead if you wait too long to get out.

Futures contract bought outright like I did my oil play takes margin out of the equation. PLenty of liquidity between now and expiry.

Or roll VIX calls each and every month. Less cost. Fairly accurate tracking. Some work involved. When to roll? Let it go to expiry and try to collect cash, or roll, take some p or l, and get out at the best possible time to set up for the next month? Probably the later.

The way I see it Doc, is that these are your three realistic choices. Or do what I told the bigfalla to do, a credit spread or collar on a tracking or inverse ETF. I'd never own the ETF, but the options on it would be an interesting play, especially if you could get paid to make the trade. Sell a OTM call, buy an OTM call, sell an OTM put etc. Some wouldn't have a lot of liquidity, which is actually good. Buyers probably are retail, and wouldn't have enough money to exercise against you. On some of these, you'd almost be the market maker. It's a lonely place, but I've done it before.