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ETFs and rising concerns (TL;DR at end)ETFs are by far the most popular form of investment, regardless of whether you are a parent saving up for your child's college or you're a multi-millionaire/billionaire banker, a good portion of your investments will be in exchange traded funds, regardless of whether that fund is for commodities, industries or indexes. Since their first implementation in the 1990s, they've have grown rapidly as seen in the thumbnail of this idea ( AMEX:VOO ). In the words of Mr. Buffett himself, there is only one problem with index funds: "they're boring". You can't stand with your friends on the weekend at the barbecue and talk about all the trades you've made in response to crazy market action because you've got some fund manager who just holds the stock of everybody worth holding (in theory). All you do is put more money into it, or take money out of it. However, recently I came to the realisation (like many other investors), they're becoming ludicrously priced. Not just the individual price but the overall market cap with companies like Blackrock and Vanguard holding quite conceivably hundreds of billions if not trillions of dollars within ETFs. Now there are concerns regarding a potential crash in the ETF market or at least the funds that trade through indeces. As far as the cause of such crash, I wouldn't dare attempt to make some degree of educated guess as anything could happen. One may consider me rather cynical when it comes to this topic but I'm sure I'm not the only person who has a problem with losing money. Now there is absolutely nothing one can do about a crash but there are other solutions to minimise losses especially in a market that is trading so dangerously high. I would personally (assuming I had the financial capacity) take out around 60-75% of my overall investments in ETFs and transfer them to AAA rated state issued bonds or simply reinvest the money in stocks I already hold. Then I would continue my regular dollar cost averaging approach to investment in ETFs (or whatever the frequency is that you add money to such funds) until such a crash may occur. At a given point, (depending on the fund and how severe the crash is) I would increase the frequency and amount of money I add to such funds as the price drop should cause them to appear very attractive. Understandably, many people will disagree with this approach as you are still setting yourself up to lose money (unless you remove all your money from the funds, while you still could potentially continue earning. This results in the investor being left in some sort of dilemma. Although this is another discussion for another day) and "past performance is no indicator of future results" but this is the approach I would take. As usual, other opinions, facts, news and comments are always welcome so comment away and stay safe! TL;DR: ETFs are trading very high in price (dangerously) and a potential crash is luring (if you have a cynical outlook).* *See the last paragraph on what I would do, due to such a situation being upon us.
AMEX:VOO
by Michael_Axio
Will the madness keep up? Or are we beginning a down trend? TSLAShort on Tesla so long as we stay below the yellow trend line not sure if it is ready to continue upwards without another retest at 1000 and perhaps a break here could lead back down to 900. Tesla is a mixed bag. Increasing EBIDTA looks good. Decreasing debt looks good. Debt to Equity ratio decreasing. Solid company. But the P/B and P/E ratios are high indicating that Tesla is overvalued. There is clearly a lot of faith for the future put in Tesla, will the time come for it to drop back down to a more representative valuation or will the madness will continue some more? Might add to my short if the RSI hits overbought on this run upwards, perhaps this is the highest we see the price before a dip to 1060/1000. Let me know your thoughts below. Constructive criticism and alternative viewpoints are always welcome. Please leave a like if you enjoy my analysis :) And as always Good day to you :)
NASDAQ:TSLAShort
by SaucyLettuce
BTC Bubble and Return to the MeanI'll be the first person to call myself a Bitcoin bull. I have been daily cost averaging Bitcoin as an investment for a while now, but I am also realistic about the asset and know that no amount of hopium can make what I want happen unless the market wills it to be so. So, with that preface, I give you my projection for the next year. As with all long timeframe projections, this is just an educated guess using historical data. I have no special crystal ball and I don't have any super powers that let me see in to the future. If you have been trading markets for any length of time, you've probably come across an image often referred to as the "Anatomy of a Bubble" that illustrates the 5 Stages of A bubble . While I don't think Bitcoin is going to completely collapse, all markets experience periods exuberance which lead to this pattern. To illustrate my idea more clearly, I've created this handy infographic to accompany my chart analysis If we zoom out on the weekly chart, we can see that Bitcoin has been in a nice and clean upward channel since, at least, August 2011. At this scale, each cycle can be clearly seen, each extending above the EQ, sometimes touching but always coming close to, the upper mark of the range. This most recent cycle, began in March 2020 with the global market panic that crashed not just crypto but also legacy markets around the world. By February 2021, Bitcoin had reached the EQ of this trend channel and there it remained, unable to continue, for the next two months, finally losing momentum in May, unable to have a high extend up and reach the EQ for another time. Now look back at the prices one year earlier, in 2019, we see a similar pattern. Price started around halfway between the range lows and the EQ, proceeded up to the EQ where it remained for a couple of months, eventually dropping back down to the range lows... Look again at the pattern for 2020 to present... looks familiar, does it not? If we assume patterns repeat, at least approximately, we can project forward from where we are today and see what the rest of the year is likely to look like. As of the time of this writing, prices are below the 0.5 DOW marker and while it's still early in the week, the current weekly candle does not look promising. Unless major support is found in the next couple of days, I expect price will continue to retrace to the 0.382 fib, just as it did back in 2019. From there, I expect we will find support, at least temporarily, a rally from there will lead us back to the golden pocket between 0.618 - 0.65 and if we are unable to break through the infamous 42k boundary and hold it, I fully expect panic will set in for many retail traders and investors which will drive us in to the capitulation and despair phase of the cycle, down to around $20k at the 0.236 and the ATH that was set back in 2017. As I said in the beginning of my post, I am bullish on Bitcoin from a hyper macro perspective, but it's not a straight line, so buckle your seat belts. The road is about to get even bumpier.
BITSTAMP:BTCUSD
by tedwardd
WHALES WANT YOU TO BUYLook at a weekly perspective, whales are not trying to buy at this prices, they are trying to sell the crypto they posses. Always the crypto crashes are fast and then it consolidates for at least 6 to 8 months. We are gonna see a lot of bull traps to make us think it will go to the moon. 30K. First take profit for short. And if we have the oportunity to buy at 14k- 8k (The fixed range and volume of interest for whales massive buy) will be ideal for a new cycle of bull trend. Cryptos are very interesting right now i'm not gonna lie.
BITFINEX:BTCUSDShort
by tariytrading
2
Low Cost Index Funds and the "bubble"As the majority of the investment community is aware, low cost index funds such as the iShares CSPX are a great way of investing your money in such a way that it will beat inflation and any other factors that will reduce the overall value of your money. Warren Buffett (CEO of Berkshire Hathaway) is notorious for recommending low cost index funds to those who are inexperienced in the stock market and even long term investments. There have recently been many arguments that made me question the integrity of this seemingly flawless investment ideology. Even Buffett said the "only" downfall to index funds is that they are, and I quote, "boring". These arguments that have sparked up across the internet are by those who fear that the inherent price of these index funds are far beyond their actual value despite them holding the top performing stocks in the market. Thus removing the need for investors to investigate individual companies and rather stand at the sidelines and say "Just buy them all and see what wins". This attitude towards index funds and the ludicrous prices/growth (in comparison to any other listed entity and their own past) has sparked major concern. I have provided a link to a video below that discusses the 2 opposing ideas presented by Warren and Michael Burry (Famous for his prediction of the stock market crash of '08) and what each of them mean. From my view point (albeit mildly inexperienced) has led me to believe that in the long run despite the concerns, there will be crashes, like every other market ever, but these crashes will be shrunk by the overall growth in the following years and or decades, therefore making it worthwhile to invest in such index funds while dedicating at least 5% of your portfolio in individual stock. TL;DR: It is inevitable that there will be a crash in all index funds at some point or another (that cannot be changed) but in the far longer term view, it will still be worth your time, money and effort to invest in such equities.
LSE:CSPXLong
by Michael_Axio
Bitcoin put your seatbelt onThe greedy pigs (that sounds so violent lol) might be very close to coming back. Pig is what are called greedy gambling type "investors" that join at the top of bubbles, not my word. "Bulls make money, bears make money, pigs get slaughtered", an old Wall Street saying. I recently saw a man talking to a homeowner outside not too far, asking him if he knows someone that could work, I think he was putting "looking for workers" papers in mailboxes. In France. No one wants to work anymore. Companies are desperate for workers. Looks like a big population of potential gamblers that didn't work for their money and with way too much free time on their hands. 200k seems far but based on BTC past price action it could seriously be just 1-2 months away. And it's all going to be the exact same story (not calling a top): Gosh. I love roasting them SO MUCH. The few gamblers that survived will get their dream in the end. Out of the emotional gamblers with no rules of 2018 I would not be surprised if not 1 in 100 will make it to 200,000. Of course, as always this tiny minority will show itself, looking for revenge and opportunities to say "told you so". How about the other 99 gamblers that got broken? I know some people really wanted to shut their mouths, but the vast majority got crushed and isn't around anymore to get their mouths shut. And of course the ones still around are the survivors with survivor bias. Life is not fair, there are always a few lucky people that survive. But does it really matter? Being envious, jealous, angry, resentful is a punishment in itself. Good for them. Let's focus on our own performance. Not even the money, the perf. To be honest I'm acting all emotionally strong giving this speech but in reality it is I have such contempt for them that like... Whatever some ants are joyful lol. Exit plan anyone? Ye I'll just use my empathy (ability to sense people emotions). When they go foam at the mouth crazy I'll be looking to sell / place a tighter stop. I don't really have an exit plan. Important warning: Unless you are an advanced investor and absolutely confident in what you are doing, have some exit strategy planned in advance. Would be a shame to risk 1%, be up 30%, then only get 5%, or as many do "breakeven" (these guys risk all profit the whole 30% but not that last 1% oh the mighty logic). Don't want to end up not knowing what to do. Dayum think about it BTC has kept doing the same thing, the 2017-2019 gamblers were persuaded it would go way up. They held through pain. And then give up right before it shoots up. And now it's indeed doing what they expected. No rules. Full emotions. It did exactly what they expected topkek. They must be so upset. I'd literally spawn rabbies viruses any time I hear a friend talk about BTC, or hear it on the tv, if I was them. Daaaaaaym, that's so embarassing too. I couldn't live with myself. Even with a crystal ball they'd lose money. Clearly not anyone can be an investor. Not sure the right mindset can be learned. Literally my very first trade was me finding a high risk to reward with PAINT in NEO (/antshares) years ago. "Wow I can just risk that little and make this much? HOLY!". Also got hyped by insane arbitrage opps in crypto 2018, while "they" all were screaming at brokers for not letting them buy and sell at litteral random prices XD I swear, they did not even look at the price (was off by over 50% after some maintenances). You got to have solid guts and be ready to take risks, but be somewhat nitty picky at the same time.
INDEX:BTCUSDLong
by MrRenev
2
Dotcom compared to today's Cryptocurrency Market - Watch Out!An online survey of 1,338 Americans by Money Magazine in 1999 found that nearly one-tenth of dot-com investors had at least 85% of their money in internet stocks. Everyone, everywhere was daytrading dot-com stocks in late 1999. According to the Intelligent Investor, what many people feared was bumping into somebody at a barbecue who was getting even richer even quicker by daytrading dot-com stocks than they were. CNBC published the following headline on April 9th, 2021: Investors have put more money into stocks in the last 5 months than the previous 12 years combined . I was stunned by this. $569 billion has flowed into global equity funds in a period of only 5 months, compared with $452 billion going back to the beginning of the 2009-2020 bull market. Unadjusted to inflation, this equals to a 24x times shorter period! An online survey of 1,338 Americans by Money Magazine in 1999 found that nearly one-tenth of dot-com investors had at least 85% of their money in internet stocks. (src: The Intelligent Investor) In a survey conducted in a FB group with over 250k members by me, 71% of the candidates said they have more than 85% of their total investing portfolio fund allocated to cryptocurrencies. The second most voted answer accounted for 10% of the candidates having 6 - 10% of their portfolio allocated to cryptocurrencies. The FB cryptocurrency investing group grew from 37.5k group members in March, 2020 to around 250k currently. Representing an increase of 570% in users. Out of the data above we can conclude the average newcomer to cryptocurrencies isn't safely diversfied in different asset classes. In a more anonymous survey, almost 60% of candidates admitted they have between $1,000 and $10,000 invested in cryptocurrencies. 8% of candidates had less than $1,000 invested whereas a same percentage had $50,000 or more invested. See Graph: How much money people have invested in cryptocurrencies The following Medium article dates back to May 8th, 2018, 4 years ago: 12 Graphs That Show Just How Early The Cryptocurrency Market Is . It predicted the evolution of the cryptocurrency market partially with the beginning stage of the dotcom bubble. The article was a success and scored well on the accuraccy of the overall predictions. One of the metrics compared were cryptocurrencies unique addresses (users) that would grow from 25M to 80M in 2021. At the time of writing there are 78 million blockchain wallets: www.statista.com In comparison, internet users increased from 70M to 400M in 2000 at the time of collapse: www.researchgate.net On January 2022, we could witness bearish action as we enter a new 4-year cycle if we divide Bitcoin's cycles by longterm bearmarkets on the logarithmic scale: Thanks for reading this article, trade safe!
CRYPTOCAP:TOTAL
by jonathanvn
1
Big Bubble in US tech stocksNO VOLUME and making new highs, BEARISH DIVERGENCE, as you know APPLE is one of the major stocks for the US economy, I can see that right now theres is a big bubble around american tech companies, (google, amazon, facebook, etc) So in the next coming years we MIGHT see a huge crash in american stocks, and by consequence in US economy. And Im not sure about this crash because the US goverment cannot allow something like this, but in this world anything is possible. If there is any grammatical mistake I´m sorry, bout right now I´m very drunk this is an experiment to see if being drunk is good for the analisys.
NASDAQ:AAPL
by Ylesc4s
2
Is Evergrande the next Lehman Brothers ??China`s economic model is based on real estate investment to drive growth. 20 Mil apartment buildings per year. China`s residential property is 20% of GDP every year. Too much! Real estate activities in China close to 30% of GDP every year. Huge! Chinese Government is Bashing the private sector, look at GOTU and BABA for example. Evergrande, second largest property developer in China has more than $300 billion in debt! Evergrande has $83.5 million interest payment Sept. 23 and a $42.5 million payment on Sept. 29 Failure to to pay in 30 days can put Evergrande in default. Today Evergrande has a Market Cap of 30.099B! At its peak, Evergrande was traded 13.5X higher! Evergrande’s potential debt blowup can send shock waves through financial markets! Today was just the beginning.
HKEX:3333Short
by TopgOptions
11
How The Everything Bubble Will Burst...And How To Profit From It I also created a video about my post for those that prefer to watch it here it is: www.youtube.com It also contains all the graphs and charts which unfortunately I can not post here. More and more market participants are talking about rising inflation and the everything bubble being the buildup to an epic crash. But is this really true? Can markets go anywhere but up? So far since the beginning of 2020 Oil is up 103% Gas 94 % copper which is key in all our electronics is up 126% iron the most used metal is up 150% coffee is up 101% corn is up 78% wheat 49% and sugar 87% The housing market is up, the collectible market is up and the stock market does not look any different. The S&P 500 has recovered above pre covid levels and gained 100 % from the bottom all the while setting 43 all time highs year to date literally a new all time high every 3.5 days in 2021 and on track to beat the record of 77 yearly all time highs in 1995. Running hot? Maybe a little... Or maybe the economy is just growing at a really fast pace? Looking at the ratio of market value to GDP however the markets are extended over a large margin to where they should be in relation to GDP. So whats going on here? Are we really in an everything bubble that is going to pop and if so how can you invest so that you make money? Before we can answer these questions we need to understand what a bubble is. Whats a bubble A bubble is defined as an economic cycle characterised by a rapid increase in market value particularly of asset prices. It is commonly accepted that bubbles arise due to the psychology of investors. They can appear across single assets, asset classes or entire markets. Bubble Cycles Bubbles always follow more or less the same pattern as we will see when we look at some bubbles that have occurred throughout history. At first things start slow as the smart money and early adopters get in on the trade. More and more professional investors start to pile in as the price starts to increase leading to awareness of the opportunity to rise until it breaks into the public. As more and more people learn about the trade and jump in because of greed and fear of missing out price starts to really take off and run away from fundamental valuations. It is this stage where mass psychology gets more and more amplified feeding into itself leading to enthusiasm turning into greed and delusion as prices reach higher and higher. The stock market is a zero-sum game the profits of one market participants are anothers losses. The more retail is buying the more profits the smart money are taking. This then is one of the most telling signs of a bubble: retail investors coming in and pushing prices ever higher left to hold the bag when the smart money ultimately leads the market lower in taking all their profits. Famed investor Jim Chanos is warning about exactly this and just said in an interview with CNBC “The problem with getting more people, retail, involved is that it always seems to happen toward the end of every cycle. Retail wasn’t there at ’09 at the bottom. They weren’t there in ’02 after the dot-com bubble collapsed. They were certainly there at ’99,”- (Buying at the top that is) He goes on to say: “(So) the problem in the last few cycles as I see it is that we get promotors and insiders and people who have done very well cashing out as retail is buying.” Past bubbles and crashes Lets take a look at some of these past bubbles to see how they stack up to where we are today. What is widely considered to be the mother of all bubbles became known in history as tulip mania. It is one of the prime examples showcasing how irrational behaviour leads to asset prices rising to unsustainable levels before they finally collapse. In 1630 tulips which had only been introduced to Europe in the 1600's were starting to be perceived as special and rare. This prompted speculation in the tulip market shortly after leading prices to increase by 2000 % between November 1636 and February 1637 before plummeting by 99 % in May 1637. During this period of time some tulips were costing as much as a house clearly showcasing the disconnect from fundamental values and the greed and mania involved which are key characteristics of bubbles. One can't help but see the parallels in looking at prices that some digital or physical collectibles are commanding these days. Cryptopunk and Axie Infinity are just two examples of NFT's that can cost much more than even the most lavish of mansions. The most expensive crypto punk so far has been sold for 8 million dollars. The most expensive NFT so far Beeple’s, Everydays ” The First 5000 Days” sold for a staggering 69 million dollars. But also many physical collectibles are commanding hefty premiums with the most expensive Pokemon card having been sold for 369.000 dollars. Almost a bargain in comparison to some NFT'S. Well to be fair though at least when the price of NFT's approaches its fair value somewhere closer to zero you will always still be the proud owner of your virtual good whereas the tulip will not only have lost its value but have withered away completely. Japan In our modern time many speculative bubbles have been attributed to overly lax and stimulative financial policies of central banks. Japan's economic bubble of the 1980's is a prime example for this. After Japan entered a recession in 1986 the government countered with huge monetary and fiscal stimulus. The resulting free and abundend liquidity led to rampant speculation in the japanese stock and real estate market with prices increasing by 300 % between 1985 and 1989 and retail going all in. The bubble burst when the fiscal stimulus was withdrawn in 1991 ushering in what is now known as the lost decade due to slow economic growth and deflation. Today 30 years later the Japanese market is still trading below its 1991 highs. Dot com bubble In the 90s the internet was a rising star and with it many companies trying to commercialise its tremendous potential. Venture capitalists caught on early and in easy monetary conditions were throwing money at dot com startups. The public started catching on in 1995 and retail trading became more and more popular. Everybody was sure that there was nowhere but up for internet stocks no matter what they did or whether they even had revenues. In 1997 record amounts of capital flowed into the NASDAQ. New online brokers were making it more accessible for the average Joe to buy and sell shares and everybody was buying into the trade of a life time. At the height of the bubble their advertisements were showing that trading is an easy way to riches. Between 1995 and 2000 the NASDAQ rose by 500% from below 1000 to over 5000 points. When nobody was left to buy the bubble finally burst and the NASDAQ lost nearly 80%. At this point even blue-chip tech stocks like Intel were down by 80%. What followed was an extended bear market and a slow recovery. It should take until 2015 for markets to recover to previous levels. The dot com bubble actually spawned another bubble on its own as investors fleeing stocks piled into the real estate market. This became known as the US housing bubble which in the mid 2000s collapsed leading to a worldwide economic crisis today known as the great recession. To support the world economy during this time the central banks of the world started implementing quantitive easing basically increasing the money supply by lowering interest rates and purchasing assets in order to help the economy recover. At this point unprecedented amounts of money were newly created and injected into the economy. Shockingly this actually continued until 2018 when the US Fed started to taper its asset purchases which caused a liquidity crisis in the markets that after 10 years of a non stop FED powered rally were not prepared to come back to reality. As we have seen these bubbles develop and burst over and over again following the same pattern. The reason for this is that financial markets like the whole bubble dynamic are entirely driven by human psychology which is best illustrated in the different phases of bubble or market cycles. Where are we in the cycle Fast forward to today. We have been in a central bank induced bull market since we came out of the last recession in 2008. In 2020 COVID hit and as result the markets collapsed and millions of people lost their jobs as the world battled lockdowns that led to stores and factories closing. The worlds central banks jumped in swiftly - injecting more liquidity into the system than ever before. They cut interest rates to zero and started large asset purchase programs in addition to the government relief programs handing out money to everybody. Just between March and June 2020 the money supply in the US increased by 300 % the largest spike ever. 40 % of all dollars in existence were printed within the last 12 months. This flood of new free money quickly found its way into the stock markets since due to low interest rates lower risk assets are not yielding returns. Leaving investors no alternatives but to rotate to riskier higher yielding assets which today is known as TINA: there is no alternative. As we have seen earlier this flood of money combined with supply chain shortages caused by Covid lead to rampant price inflation throughout different asset classes within a short amount of time. It sure looks like we are in bubble territory but where are we within the cycle? One key characteristic of any bubble nearing its peak is the involvement of the general public or retail crowd. Therefor the degree to which retail investors play a part in the current boom cycle plays a key role in understanding where we are in the bubble. So what does the data tell us Retail participation in bubbles Since the beginning of the pandemic the amount of retail brokerage accounts opened has skyrocketed. Rxxbin Hxxd now has 18 million users almost doubling their amount of users before the pandemic started. They introduced fractional shares allowing you to start investing with as little as 1 dollar. Their advertising message is everybody is an investor and I guess in a bubble everybody is. The interest for trading has spiked online and offline. You know its getting sketchy when your little niece asks you for stock tips. But there is not only more retail trading the new traders are also younger and more inexperienced. A large part of todays market participants has never even seen a market correction of more than 10 % let alone a true recession. It is no surprise than that these investors are overly optimistic and can not believe the market can go anywhere but up. (It sure seems though that history is set to repeat and most of the retail crowd will be left holding the bag instead of taking home the tendies. As an old saying on wallstreet goes: “A man with money meets a man with experience. The man with the experience leaves with the money, while the man with money leaves with experience.”) The only thing more telling than the growing number of retail traders is the amount of money that has been flowing into the market. Over the last 25 years global equities had inflows of 727 billion USD cumulatively. Now hold on tight because this is truly crazy. Global equity inflows for 2021 annualized amount to 1.015 trillion USD. Yes thats right trillion not billion almost 300 billion more than have been flowing into the market over the last 25 years combined coming in in just one year. Over 80 % of these flows have gone into passive funds, ALL US, ALL LARGE CAP. At the same time margin debt has risen to historic highs as well. Market participants have never been this leveraged before. These days in the light of the FED support there is only one mantra driving the crowd: buy the tulip uhhh... dip. Crash scenario It seems then that retail is indeed all in or at least getting pretty close. Looking at these unprecedented huge inflows into equities and the retail trading frenzy it sure looks like we are in the last cycle of the bubble but how and when is it going to pop? There are currently many challenges ahead that might trigger a bigger correction or crash leading to these bubbles to burst. Lower vaccine efficacy and the spread of the delta variant are impacting supply chains putting more pressure on already elevated prices and slowing down the Chinese economy. The FED starting to taper into a slowing recovery might as well be a recipe for the crash that we have been waiting for. But whatever event is going to trigger the sell off every day margin debt is growing the resulting margin call avalanche that will ensue is getting bigger and bigger making sure that whatever correction we will see will not be a small one and might even trigger a recession. How to profit from this It sure seems like the central banks are running out of options and it will be very interesting to see how they respond to this. So when is this going to pop? It is very difficult to time market tops or bottoms due to the psychological nature of market cycles. As we have seen when looking at historic bubbles they can stretch on for years before they reach their peak. As they say on wallstreet: the market can stay irrational longer than you can stay solvent. In the past the yield curve has been a great leading indicator to detect a recession ahead. Of course there is no guarantee this will be predictive again but there is a good chance since ultimately it is down to smart investor behaviour. In any case watch out for the yield curve inverting as a warning signal. Nobody knows what event or chain of events will cause enough market participants to panic sell and trigger a crash. However being aware of these cycles and roughly what part of the cycle we are in allows you to manage your portfolio in a way that you can make money instead of loosing it. As promised lets look at how to do exactly that. Lets assume that your portfolio is already well diversified. Now your goal is to maximise your profits and minimise your risk therefor you want to have liquidity available to buy into a crash and at the same time protect your existing portfolio from losses. There are different ways to do this but my preferred way is to keep taking profits on a regular basis on all my positions. The resulting profits are partly held in cash or liquid inflation protected assets and the other part is used to build a position that is going long volatility. The current market has very low volatility. The only way is up and there are only minute corrections to the downside that are immediately bought up. This means the VIX a measurement for volatility is trading at relatively low levels. A big correction or crash in the overall market will lead the VIX to spike up. Thus going long volatility while buying the VIX with futures, options or ETF's earns our portfolio excellent protection from the crash. If you balance the VIX position and your portfolio out correctly you can easily cover all losses with the VIX position all the while being liquid enough to buy into the crash in order to profit from the recovery that inevitably will ensue.
TVC:VIX
by TradingPit
2