Indeks S&P 500Penjualan
What can you do in a market selldown ?
Diupdate
First thing first, making profits out of a sad event like the Coronavirus is not something to be excited about. By now, the media worldwide is splashing travel ban to China, more cases of people afflicted with this virus, inadequate medical supplies,etc.
Thus, i would be donating part of my profits to get some medical supplies for the people in Wuhan. Keep up the fighting spirit, people. My prayers is with you and your family.
If you have a sea of red in your portfolio , what do you do now ?
Perhaps, last December, you were celebrating with the double digit returns you got from the stock market. In less than a month, not only is your profits evaporated but has now been in the red. Yeah, the feeling sucks, I know.
This is what I am doing to my portfolio and I would it would help you too :
Based on 80/20 rules, do a quick tabulation of all your counters. Rank them in value or % terms, which bleed the most. Can you identify the reasons you bought it in the first place ? Was it a decay in the business model or is it due to a unforeseen circumstance like this coronavirus ?
For example, many REITS that operate malls in China are down quite badly, suffering from 3-5% losses as news of these malls are being temporarily shut down. In business, when you are unable to forecast when you can get back to business, that is a concern as there are fixed costs that you need to continue to pay.
Is selling the answer ? That depends on your price entry.
Using the SPX500 chart as example, if the correction is at least 10% based on many analysts estimate, then we are looking at 3000 price level. We are now only 3% down, another 7% to go over the next few weeks and months.
The bullish trend has been broken down and if you want to short, you can wait for a pullback and execute it. Goto the 4H time frame would help you to identify a better entry point.
Trailing Stop Loss - this is one of my best defence regardless of bull or bear market situation. And in a exceptional situation like now, using the TSL has been very helpful to prevent a major market selldown.
Buying - All buying should be ceased for now since we do not know how long more is the selling or panic selling will end. While I agree this is also a buying opportunity, we must be patient so we can get it at a cheaper price. For example, I scoop some FB shares yesterday after it fell over 6% and is now down another 2 over %.
Averaging down to get a better price is OK but cheap can get cheaper. Again, be patient as it is fairly obvious that SPX500 is only beginning to sell down (based on trend line analysis). Avoid borrowing money to invest further unless you know what you are doing. Also, lower your margin trading as over leverage can be fatal if heavy selling continues.
Emotions - It can be depressing to look at your portfolio with a sea of red but if you have solid reasons to buy into these counters, then be assured that they will come out of the woods sooner or later. Avoid spending too much time monitoring the price and make yourself feel lousy.
What I did - I continue with my usual exercise regime - nothing beats having a strong immunity against all kinds of viruses and as Head of the family, it is my responsibility to stay fit and healthy.
Watchlist - Keep a record of all those great companies that have fallen or still falling , articles , news, charts, etc so that when the time is ripe to buy, you are ready. This is the time to do your research.
Hedging - Yen , gold , CHF and bond are some of the safe haven assets that you can use to hedge your portfolio. However, if you learn the skills of short selling, then the same asset class like futures, stocks can also be shorted as well. For example, I am shorting Dow and HSI now !
Another way is to buy VIX (fear index) which I personally did not like due to the volatility of the price movements.
Above all, keep on praying and believing this too shall pass, however severe the situation may be. Hang on there! If you have to trade, remember to use STOP LOSS and employ appropriate risk and capital management. Do not think that by doubling your position size , you can recoup back your losses. The trend once formed will take a while before it reversed so going against it can be a very costly mistake !
Trade safely and God bless everyone !
Thus, i would be donating part of my profits to get some medical supplies for the people in Wuhan. Keep up the fighting spirit, people. My prayers is with you and your family.
If you have a sea of red in your portfolio , what do you do now ?
Perhaps, last December, you were celebrating with the double digit returns you got from the stock market. In less than a month, not only is your profits evaporated but has now been in the red. Yeah, the feeling sucks, I know.
This is what I am doing to my portfolio and I would it would help you too :
Based on 80/20 rules, do a quick tabulation of all your counters. Rank them in value or % terms, which bleed the most. Can you identify the reasons you bought it in the first place ? Was it a decay in the business model or is it due to a unforeseen circumstance like this coronavirus ?
For example, many REITS that operate malls in China are down quite badly, suffering from 3-5% losses as news of these malls are being temporarily shut down. In business, when you are unable to forecast when you can get back to business, that is a concern as there are fixed costs that you need to continue to pay.
Is selling the answer ? That depends on your price entry.
Using the SPX500 chart as example, if the correction is at least 10% based on many analysts estimate, then we are looking at 3000 price level. We are now only 3% down, another 7% to go over the next few weeks and months.
The bullish trend has been broken down and if you want to short, you can wait for a pullback and execute it. Goto the 4H time frame would help you to identify a better entry point.
Trailing Stop Loss - this is one of my best defence regardless of bull or bear market situation. And in a exceptional situation like now, using the TSL has been very helpful to prevent a major market selldown.
Buying - All buying should be ceased for now since we do not know how long more is the selling or panic selling will end. While I agree this is also a buying opportunity, we must be patient so we can get it at a cheaper price. For example, I scoop some FB shares yesterday after it fell over 6% and is now down another 2 over %.
Averaging down to get a better price is OK but cheap can get cheaper. Again, be patient as it is fairly obvious that SPX500 is only beginning to sell down (based on trend line analysis). Avoid borrowing money to invest further unless you know what you are doing. Also, lower your margin trading as over leverage can be fatal if heavy selling continues.
Emotions - It can be depressing to look at your portfolio with a sea of red but if you have solid reasons to buy into these counters, then be assured that they will come out of the woods sooner or later. Avoid spending too much time monitoring the price and make yourself feel lousy.
What I did - I continue with my usual exercise regime - nothing beats having a strong immunity against all kinds of viruses and as Head of the family, it is my responsibility to stay fit and healthy.
Watchlist - Keep a record of all those great companies that have fallen or still falling , articles , news, charts, etc so that when the time is ripe to buy, you are ready. This is the time to do your research.
Hedging - Yen , gold , CHF and bond are some of the safe haven assets that you can use to hedge your portfolio. However, if you learn the skills of short selling, then the same asset class like futures, stocks can also be shorted as well. For example, I am shorting Dow and HSI now !
Another way is to buy VIX (fear index) which I personally did not like due to the volatility of the price movements.
Above all, keep on praying and believing this too shall pass, however severe the situation may be. Hang on there! If you have to trade, remember to use STOP LOSS and employ appropriate risk and capital management. Do not think that by doubling your position size , you can recoup back your losses. The trend once formed will take a while before it reversed so going against it can be a very costly mistake !
Trade safely and God bless everyone !
Catatan
Ah, a false alarm. It is now back into the bullish trendline and people are back to normal , getting excited to buy again. I am awaiting for the breakup of 3300 before initiating a buy
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