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Discussion Starter · #1 ·
Is anyone planning to short the stock market for 2014 decline ?
 

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I was thinking about it, but decided it'd be better to just buy stocks/etfs if/when they're cheaper (keeping extra cash for this :)) If I had more investing experience maybe I'd try shorting, but from what I read seems too complicated&risky...

What about you? :)
 

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I already shorted anything that moves (S&P 500, TSX, CAD$) - on paper - via kcowan's 2014 Predictions Contest :biggrin:
As you can imagine, that aint going so well thus far :stupid:

In reality, I am fully invested and not short anything (other than a few covered calls).
However, I do have a cash position within my trading accounts.

I consider cash as a call option on a market correction.
 

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Discussion Starter · #5 ·
Moneytoo

I think playing the long side is the risky side for the rest of the year. Buying a crash ticket with put options I think offers a better opportunity to make it rich then holding long for the remainder of 2014. Of course do not bet the farm only a small percentage. Most holding long will have over 2% of their portfolio long a 20% drop or more will cause them to lose more money then if a player is playing the downside with 1% or 2% of their portfolio. If the market does crash I think playing puts would make as much money as a strong rally into year end. My view of the market says the time is now to play the downside till the end of Oct 2014
 

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Moneytoo

I think playing the long side is the risky side for the rest of the year.
Well I have ~20 years horizon, so I'm thinking if I buy BCE at $49 and Loblaw or Manulife or some other big company from my watchlist - it'd be better long term than if I bet and lose (besides, from what I read Canadian stock market doesn't have that many options as US one, and I'd rather spend USD on a good company/etf :)) We have a few limit orders and plan renew them till October if they don't get filled during summer, but I don't think our accounts are even set up to trade options...
 

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Nope. Buy and hold regardless of what the market does. If the market goes down, I'll turn back on some of my DRIPs and get the same stocks at cheaper prices. That's about it to my strategy. Very boring actually.
 

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I'm fully invested, as always. Technically I'm more than fully invested because I use both margin and short put options.

I do have room in my margin accounts to borrow or to sell more put options. If the market corrects, I'll sell uncovered put options and invest the proceeds.
 

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lonewolf, every month since a long time ago... you keep starting a new thread about "markets crashing, run... short..." You have not been right for many many times so far. You remind me of that pastor predicting the end of world so his followers sold everything to wait and wait and wait... lol.

You will be right eventually...a broken clock gets the time right twice per day. The problem is, most people go broke if they short or bet at the wrong time. You might as well ignore the market fluctuations and focus on the long-term uptrend strategy.
 

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Discussion Starter · #10 ·
History should repeat
I feel most complacent when everyone is fear full.
Now everyone is complacent & I feel fear full like I did in late 2007when I shorted the market through to the 09 low.
All that has to happen now is for the money to start coming in as the bear takes hold. Then history will have repeated
 

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Now everyone is complacent & I feel fear full like I did in late 2007when I shorted the market through to the 09 low.
Where is there fear? In late 2007 the U.S. was plagued by extravagent mortgages extended to even those with household incomes below the poverty line. Wall Street was even betting on their shady loans by securitizing CDOs and betting against their decisions with credit default swaps. Ratings agencies gave insolvent companies AAA ratings. There were clear signs that something bad had to happen. So, what is happening in the current global economy that would cause a similar decline?
 

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lonewolf, every month since a long time ago... you keep starting a new thread about "markets crashing, run... short..." You have not been right for many many times so far. You remind me of that pastor predicting the end of world so his followers sold everything to wait and wait and wait... lol.

You will be right eventually...a broken clock gets the time right twice per day. The problem is, most people go broke if they short or bet at the wrong time. You might as well ignore the market fluctuations and focus on the long-term uptrend strategy.
Garth Turner, apparently, has been predicting real estate crash for more than 6 years. Some people leave comments that they bought and sold during this time (making profit), some even paid off their mortgage already, yet he remains stubborn: http://www.greaterfool.ca/2014/06/17/stubborn - and many thank him for saving them from what most likely would've been the biggest mistake of their lives.

Time will tell, of course, but I personally am grateful to posters like Pluto and lonewolf - who keep reminding that "what goes up must come down". I cringe when I read advice to "go all in" and who cares what happens if you have long term horizon. People are different, and not everyone can stomach correction or the crash - no matter how many people tell them that it's nothing to worry about.

I'm glad that we started with individual stocks. Some went down right after we bought them - and no matter how I tried to explain to my husband that we should buy some more "at a discount" - he just couldn't do it. And he's an intelligent, not overly emotional man. Glad that he didn't sell anything - yet :)

My point is, it comes with experience. And it's better to test how you'd react to 10-20% drops on smaller amounts. A lot of people (who I guess never come to these forums since they "got burned") were buying high and selling low. The same will happen to many of those who've been "successful passive investors" during the bull market.

If I werent a chicken, I'd try options... :)
 

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Discussion Starter · #13 ·
Where is there fear? In late 2007 the U.S. was plagued by extravagent mortgages extended to even those with household incomes below the poverty line. Wall Street was even betting on their shady loans by securitizing CDOs and betting against their decisions with credit default swaps. Ratings agencies gave insolvent companies AAA ratings. There were clear signs that something bad had to happen. So, what is happening in the current global economy that would cause a similar decline?
Hi, Canadian

I m the one with the fear. I seam to get it @ important highs.

Why I see complacency

When I look @ price pattern on the S&P I don't see fear. Each correction seams to have gotten smaller & smaller as investors have been programed to buy dips.

Margin Debt not sure where it is now but was recently @ all times highs
Investor intelligence advisor survey: Beginning of June over 62% bulls, Since 1987 only 3 readings above 62, the other 2 were 2005 before real estate top & before the 2007 historic top in stocks.

According to Aon Hewit who tracks 401k investments @ large corporations, plan participants are directing 67% of their new contributions toward stocks highest reading since March 2008 - 5 months after historic market peak.

S&P 500 bull/bear ratio has been above 3 recently (google Yardeni bull/bear 2014

Historical low vix readings

Put/call ratios is heavily in favour of calls

greedometer readings ( not experienced with this indicator but has hit highest reading ever )
 

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For me shorting is out of the question. This is not a bear market, and it is unwise to short it. I'd want to see an obvious end to the bull market first. There is still way to much stimulus for this market to turn into a bear market.
 

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From many years of investing, here is what I have learned. Pay particular attention when establishing your target asset allocation and then just stick with it through all market conditions and don't try to time the markets. However, I expect that you will each have to learn your own lessons in life based on your own particular experiences. The markets rise and fall in the short term but generally rise over time. During the steep drop in 2008, I sold nothing and just hung tough. Am I sorry today? Not at all! Buy, hold and prosper.
 

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Maybe it's me, but I count more bears than bulls as this bull market ages.

So I think the markets will continue to slowly move up just to frustrate everybody who believes otherwise.

So many people can't be proved right. That's just not how the stock market works.

(the above post made strictly tongue-in-cheek)
 

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Now that we are entering the summer doldrums, trading will be thin and the big guys will be off on their yachts until September. Zzzzzzzz.

Sell in May and go away. Buy when it snows and sell when it goes.

As a buy-and-holder, I do neither but there is some evidence that staying out of the markets in the summer results in superior long term returns. Who knows?
 

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Unfortunately, says Colombo, “very low interest rates are notorious for inflating new economic bubbles that create the illusion of a recovery and growth, but end in crises when the bubbles pop.”*

So, risk. Lots of it swirling around us. Interest rate diddling, stimulus spending, debt binging and speculation. The only thing for sure is that it’ll end, to be replaced by new conditions. And most people will realize this when it’s too late to react.

I’ll take prescient. I have a Plan B.


http://www.greaterfool.ca/2014/06/22/stress

Wonder what Garth' Plan B is... :)
 
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