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Message
re: Downside Protection on Pullback
Posted on 1/21/21 at 3:46 pm to Aubie Spr96
Posted on 1/21/21 at 3:46 pm to Aubie Spr96
You'll probably get downvoted to hell because most don't like to acknowledge potential downturns, but I think it's prudent to have a plan.
I think certain parts of the market are bubbly, especially in growth (most notably tech). Even the indices are being propped up by a few large companies.
I've never heard of TAIL. I know certain strategies of purchasing Puts to hedge, but I've personally never done it. I like the idea rather than just selling though.
Also, some knowledgeable people play the VIX, but I've only dabbled in that.
I'm interested to hear ideas from some of the smart folks around here.
ETA: I agree that current Fed policy will prop up markets at least for the short term, but I do expect to see some drastic moves to the downside this year.
I think certain parts of the market are bubbly, especially in growth (most notably tech). Even the indices are being propped up by a few large companies.
I've never heard of TAIL. I know certain strategies of purchasing Puts to hedge, but I've personally never done it. I like the idea rather than just selling though.
Also, some knowledgeable people play the VIX, but I've only dabbled in that.
I'm interested to hear ideas from some of the smart folks around here.
ETA: I agree that current Fed policy will prop up markets at least for the short term, but I do expect to see some drastic moves to the downside this year.
This post was edited on 1/21/21 at 3:48 pm
2
Posted on 1/21/21 at 4:09 pm to rintintin
quote:
You'll probably get downvoted to hell because most don't like to acknowledge potential downturns, but I think it's prudent to have a plan.
Yeah. Taking profits and sitting on the sidelines for a bit seems like a prudent move at this point in the run up. Again, not a total divestiture. I'm keeping positions that I believe in long term.
Posted on 1/21/21 at 8:45 pm to rintintin
quote:this is simply not true.
most don't like to acknowledge potential downturns
quote:of course. But the plan does not need to be reactionary, because that makes you more likely to panic and act on emotion. The plan needs to factor in potential downturns at any time. Be it rebalancing (this includes taking profits) , trimming overweight positions etc.
but I think it's prudent to have a plan.
Not when you feel like it, because history says you're likely to be wrong as you'd have to time entry and exit.
There was a poster here that had an interesting strategy, Iowa Golfer, I believe. Can't remember the specifics, but the gist was to buy puts and just view the premium as insurance for his holdings. "people insure everything else, why not their portfolios" was his MO.
This post was edited on 1/21/21 at 9:10 pm
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