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During a Bullish market and uncertain times, what are strategies used to retain some profit in a quick reversal scenario? Swing trading can help lock in profits and not tie up money, but it’s putting a clear ceiling on gains. Do many look for a certain high point and at that time follow with a trailing stop loss for most positions?
My personal method is I have rebalance bands that force me to reset my equities back to their original allocation and I buy more defensive assets like gold and long term treasuries which tend to fall in a bull market in equities But go up in recession caused by a slow down
One of them is for long-term, never-going-to-need-it funds, and that portfolio is all equities.
The other portfolio is my lower volatility portfolio for funds that I'm looking to use in case other investment opportunities come up (ex. real estate) in the next several months. I wanted these funds in something somewhat defensive in case the market goes south, but with upside in case the market keeps climbing. So, I have these assets in an equal allocation of Total Stock Market, Small Cap Value, Long Term Bonds, Short Term Bonds and Gold.
My work 401k is 100% equities and will stay that way. Wont be needed for 30 years.
My Roth, I tend to balance between 60% to 100% equities since covid began. Before covid i was 88% for 10 years never changing anything.
Back in early March I lowered my equity exposure to 60% and went 100% equities near the bottom and put 50% of my portfolio in Microsoft google apple and UPS. In April I sold 25% of the stock positions. Today I sold another 25%. I'm basically averaging back into a 80% equity model that will allow me to not take as big of a hit if we see another 30% retracement. At that point I'll go back 100% equities
Long story short. I rebalance to lock in profits and minimize potential losses. In doing so im also limiting gains. If I held my original stock positions I took in march I would have been better off. Overall I'm up about 10% from my february highs.
My work 401k is 100% equities and will stay that way. Wont be needed for 30 years.
My Roth, I tend to balance between 60% to 100% equities since covid began. Before covid i was 88% for 10 years never changing anything.
Back in early March I lowered my equity exposure to 60% and went 100% equities near the bottom and put 50% of my portfolio in Microsoft google apple and UPS. In April I sold 25% of the stock positions. Today I sold another 25%. I'm basically averaging back into a 80% equity model that will allow me to not take as big of a hit if we see another 30% retracement. At that point I'll go back 100% equities
Long story short. I rebalance to lock in profits and minimize potential losses. In doing so im also limiting gains. If I held my original stock positions I took in march I would have been better off. Overall I'm up about 10% from my february highs.
When you sell off, in 25% slots back to 80% equity, where are you putting that money? Sitting in cash?
When you sell off, in 25% slots back to 80% equity, where are you putting that money? Sitting in cash?
Vanguard Wellington. It has about half the volatility of the snp 500. When I sell I buy into that more conservative fund. I only sat on any cash for a very short period.
While I love the idea of greed and realizing more gains and always have a fear of missing out (FOMO), for me I am learning better how to stop being greedy as a way to retain my gains
If stocks I hold have surged in a way that my overall gains have far outpaced the average annual market return (of let's say 10% . . . I think it was 10-11% for the 90 years prior to 2018 for the S&P 500), then perhaps that's a sign for me to take my gains now. For instance, I'm already 20%+ up on what I invested this year since March, thanks in large part to how my stocks did the other day. Realizing this, I could have remained greedy (I'm not using greedy as an inherently bad word here) and held on for potential future gains, but I'd be taking what some may consider an unnecessary risk driven by greed, again especially as I already had well outperformed the average annual rate of return. Had I not sold when I did, I'd still be up, but my position would have been significantly reduced as of market close yesterday.
Acknowledging that you can't time the market and some of this is going to be pure luck, all of this is to say that it may be wise to set a price/percentage point gain before you'll sell to protect your gains, and actually stick to that.
I'm not saying stay out of the market once you've sold, but if you've already well outpaced the average rate of return for the year, perhaps only get back in for the year on clear upswings for certain stocks, etc.? And don't stay in long enough trying to replicate what you've seen before, but only long enough to realize small to modest gains?
Anyhow, that's what I have done and plan to continue doing going forward. I know that its far from a perfect strategy and that I'll have my ups and downs just like everyone else, but it's something that I'm trying now.
While I love the idea of greed and realizing more gains and always have a fear of missing out (FOMO), for me I am learning better how to stop being greedy as a way to retain my gains
If stocks I hold have surged in a way that my overall gains have far outpaced the average annual market return (of let's say 10% . . . I think it was 10-11% for the 90 years prior to 2018 for the S&P 500), then perhaps that's a sign for me to take my gains now. For instance, I'm already 20%+ up on what I invested this year since March, thanks in large part to how my stocks did the other day. Realizing this, I could have remained greedy (I'm not using greedy as an inherently bad word here) and held on for potential future gains, but I'd be taking what some may consider an unnecessary risk driven by greed, again especially as I already had well outperformed the average annual rate of return. Had I not sold when I did, I'd still be up, but my position would have been significantly reduced as of market close yesterday.
Acknowledging that you can't time the market and some of this is going to be pure luck, all of this is to say that it may be wise to set a price/percentage point gain before you'll sell to protect your gains, and actually stick to that.
I'm not saying stay out of the market once you've sold, but if you've already well outpaced the average rate of return for the year, perhaps only get back in for the year on clear upswings for certain stocks, etc.? And don't stay in long enough trying to replicate what you've seen before, but only long enough to realize small to modest gains?
Anyhow, that's what I have done and plan to continue doing going forward. I know that its far from a perfect strategy and that I'll have my ups and downs just like everyone else, but it's something that I'm trying now.
the problem with the thinking " if you've already well outpaced the average rate of return for the year, perhaps only get back in for the year on clear upswings for certain stocks, etc.? "
is that market long term gains and averages are based on very excessive gains at times and very poor returns at times ... so hypothetically if you call a year with 15% returns so far above the norm, then if they end up going up 30% and next year suck , you needed the 30% gain to balance out the poor year .....
years are not typically average ... they tend to be above average or below average so you can't really call it a day because you hit the average or are above .... you really need each years gains or losses to get the average ... ....
the problem with the thinking " if you've already well outpaced the average rate of return for the year, perhaps only get back in for the year on clear upswings for certain stocks, etc.? "
is that market long term gains and averages are based on very excessive gains at times and very poor returns at times ... so hypothetically if you call a year with 15% returns so far above the norm, then if they end up going up 30% and next year suck , you needed the 30% gain to balance out the poor year .....
years are not typically average ... they tend to be above average or below average so you can't really call it a day because you hit the average or are above .... you really need each years gains or losses to get the average ... ....
That's a fair point.
I don't suggest that my strategy is foolproof or anything close to it, but its something that I'll try to follow as best as I can and make adjustments where necessary (acknowledging that so much is out of my control).
I don't suggest that my strategy is foolproof or anything close to it, but its something that I'll try to follow as best as I can and make adjustments where necessary (acknowledging that so much is out of my control).
i would run two portfolios and anything i take off the table i would put in a model that can still make good money up or down ....
i will start to take some of the money from the fidelity insight model and move a bit of it to the all weather model ....with 2/3's now in the insight model i can lighten that up a bit and add more to the all weather model
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