As the saying goes, “it’s time in the market, not timing the market”. There is a lot of research that says that market timing is incredibly difficult and most people fail to do it successfully.
Also your assumption that the fed will raise interest rates to control inflation assumes that low inflation is their actual goal rather than just their stated goal. This months ARP newsletter has an excellent analysis of why higher inflation might be their desired outcome : https://www.arpinvestments.com/arl/why-much-wealth-must-be-confiscated
Furthermore, if you have already sold all your stocks, you are already sitting on a potential 30% gain if your assumptions play out. Shorting the market is a high risk leveraged strategy that could leave you with large losses if the market goes sideways, or continues to rise over the next months.
To be clear I do think that a significant market correction is coming, however as someone who tried (and failed) to successfully time investments during the dotcom bubble and in much of the decade after, I am much more comfortable being fully invested, knowing that whatever happens short term, this is the easiest, and lowest risk way (for me—based on my investment profile and personality) to maximise my returns long-term.
Yeah, that’s exactly how I look at it: The benchmark is the index, not cash. So I would see it as a 30 percent gain. But I figure that either I need to recalibrate my odds, or I need to make a bet that maximises long-run growth based on my credences. I don’t think holding cash is optimal.
Well aware of the risks, but I’d kick myself if I were right and didn’t act. I’m buying puts so the limit is the initial investment. Can’t go bankrupt.
As the saying goes, “it’s time in the market, not timing the market”. There is a lot of research that says that market timing is incredibly difficult and most people fail to do it successfully.
https://www.forbes.com/sites/simonmoore/2016/03/07/the-myth-of-market-timing/
https://theirrelevantinvestor.com/2020/12/23/3-reasons-why-you-shouldnt-wait-for-the-stock-market-to-crash/
Also your assumption that the fed will raise interest rates to control inflation assumes that low inflation is their actual goal rather than just their stated goal. This months ARP newsletter has an excellent analysis of why higher inflation might be their desired outcome : https://www.arpinvestments.com/arl/why-much-wealth-must-be-confiscated
Furthermore, if you have already sold all your stocks, you are already sitting on a potential 30% gain if your assumptions play out. Shorting the market is a high risk leveraged strategy that could leave you with large losses if the market goes sideways, or continues to rise over the next months.
To be clear I do think that a significant market correction is coming, however as someone who tried (and failed) to successfully time investments during the dotcom bubble and in much of the decade after, I am much more comfortable being fully invested, knowing that whatever happens short term, this is the easiest, and lowest risk way (for me—based on my investment profile and personality) to maximise my returns long-term.
Good luck in any case!
Yeah, that’s exactly how I look at it: The benchmark is the index, not cash. So I would see it as a 30 percent gain. But I figure that either I need to recalibrate my odds, or I need to make a bet that maximises long-run growth based on my credences. I don’t think holding cash is optimal.
Well aware of the risks, but I’d kick myself if I were right and didn’t act. I’m buying puts so the limit is the initial investment. Can’t go bankrupt.
Thanks, mate.
“Yeah, that’s exactly how I look at it: The benchmark is the index, not cash. So I would see it as a 30 percent gain.”
Why? If you are right you have 100% compared to 70% someone has who’s position has lost 30%. Isn’t that 42.9% more?
In my defence, we didn’t do arithmetic in my mathematics degree.