I was asked when should we come back from WSB yesterday. Here it is:
In
my book such as "Profit from the coming crash", the market timing has
exit and reentry points based on technical. One uses charts and the
other one does not.For a ballpark number, it COULD be 45% loss from the peak.
The
above is assuming we've a market crash. For corrections, it could be
15% (10% average but adjusted due to the recent huge gain) loss from the
peak.
The trillion-dollar question is: Is it a
crash or a fierce correction? Many factors have been described in the
book. However, corrections are harder to detect. A
book is just a book. It is based on historical data (2 last market
crashes for me) and every market is different. If you're very
conservative like me, you should take actions. I've been too
conservative having a lot on CDs for a while and missed some of the
recent gain. Again, depends on your risk tolerance.
For
conservative investors, use 40% for crashes and 12% for corrections (or
even lower so you do not miss the boat at the risk of coming too
early). If you feel the crash will last for a year, buy some CDs that
mature in 1 year - better than your broker's account collecting
virtually no interest.
You are responsible for your actions, NOT me.
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