Avoiding a Bear market

[WFJ]

IMHO, the OP is looking for validation and not information. Let OP follow these chartists over the cliff. I "time" the market but 100% due to my income smoothing when not working vs when working. I heavily sell equities and invest in cash or extremely short duration Bills when I ERE and almost 100% equities when I have income.

From a stats perspective, I can make any chart look good by just data mining the windows or weekly returns and duration of investing period, and why these are useless for any analysis. For example, if we use weekly windows of 1, 2, 3, ... 49, 50 weeks, what percentage of these windows will produce significant results? 5@10%, 2-3 @5% and maybe 1 @1%, this is random chance. This is the magic of data mining. Do an out of sample test on all technical analysis and all result in 0% significance, but anyone with marginal stats knowledge can find several significant windows. I've failed miserably at explaining this, but still do my bidding.

[Michael_00005]

Sounds good, I've not seen anything questionable with Mark M. yet, but I'm new to watching his advice. From reading one of his books, it was obvious he's meticulous in his approach to quality and detail, and he's made a lot of money investing. Not impressed with Cathy Wood, never have been.

If you're on Twitter, you might find David Ryan's advice interesting, he's another regular at winning investing championships. Some of his dated comments below:

David Ryan
@dryan310
·
Apr 7
If the major market indexes break below their 50 day moving averages, then we will make a trip back to the lows. With rising interest rates overhanging the market, any minor rally should be used to further cut back exposure.

David Ryan
@dryan310
·
Mar 23
The best of the rally is behind us. I would use this opportunity to sell any stocks you are holding with losses. Repeating what I have said for the last year, stay with the cyclicals and metals.

David Ryan
@dryan310
·
Mar 15
With the major indexes back at their 2/24/22 lows, I would be looking look for a turn here and a tradable rally. Be careful, the longer term trend is still down and any rally might not last longer than a couple weeks. News events will also add to the volatility of such a move.

David Ryan
@dryan310
·
Feb 28
Use this rally to sell any tech stock that has dropped more than 50% from its high. It could take years for them to come back, if they do come back. The market's rally since Thursday is likely over and could be going back to the lows. Stay with cyclicals, oil, defense and gold.

[Michael_00005]

By the way, I'm not advising anyone to invest this way!!! But if you're interested in avoiding downward trends (bear markets), then the material in this post might be worth looking into. Everyone really should do their own research, failing to do that is asking for trouble.

Below recording added today on IBD: Stock Market Myths Busted (4/22/22)
https://www.investors.com/videos/stock- ... hs-busted/

It's interesting they mention "You can't time the markets" as a myth, it certainly looks like a growing number of investors follow sites/people who time the market successfully. Wish I would have found this a long time ago!! The historical comments I've been seeing (from some people) are spot on. Mark Minnervini and others have recommended cash or zero lose trades (with stop losses) back in Nov., 2021.

This today -
David Ryan
Apr 22
"With the 50 day moving averages broken on the major indexes, the next stop down are their 2/24 lows. I expect this fast two day drop to be followed by a grinding, torturous decline with weak rallies that shouldn’t be traded. The goal is to lose a[s] little as possible."
------------

Maybe something changes the trend soon; a big drop in inflation could do it. Important to know -> getting out when the trend is downward, is only half the equation, because if you don't buy back in when the trend turns upward it only means taking loses which you will not recoup. So you either follow the system or you don't. The other option is to ride it out, and that might be best for many.

This really looks to be a phycological issue with people in general, we learn things early in life, or someone repeats something which could be true (for most people/cases) and then the majority thinks it means: no one can do it. I've seen so much of this in my lifetime, when the herd goes one direction, it's often best to do your own research - and then you generally find it's best to go the opposite direction. Same issues with diet, where people are eating the SAD (meat) which leads to all kinds of chronic diseases, and people assume what they learned as a child is best, when it's not. Could be any subject: sciences, spirituality, retirement, nutrition, investing, education; there will always be people out there who are very good at what they do, within their own area of expertise.

The real secret in life is to find the true masters of any given subject, and then be humble (or broad-minded) enough to re-learn or un-learn. The difficult part in that, is finding the real deal; in my experience these types of people pass the info on as a service, i.e. they've already succeeded financially in life and their main goal is not financially motivated.

[sky]

What is your prediction for the SP500 low between now and the end of the year?

[Michael_00005]

What is your prediction for the SP500 low between now and the end of the year?

No idea Sky, but would probably say a lot depends on inflation and interest rates. In the Short term rates might come down and then we could rally this year, but long term I think excess national debt is the same thing as currency devaluation.

I'm a little bit baffled at the level of incompetence with leadership in this country. That's not a knock on Rep. or Dem., they're both the same, and neither deal with real issues. Everyone pandering for short term benefits, self interest, and greed rules the day with politicians. It would be easy to give 100's of examples - we could have a robust mass transportation system in this country; we could have outlawed cold (sales) calling back in the 1980s, when people still felt confident answering the phone; the truth about nutrition could be taught massively reducing healthcare costs, etc., etc. but it's all about $$$$

What is your prediction for the SP500 low between now and the end of the year?

[white belt]

I handicap an 80% chance of worsening conditions. That means I don’t see the SP500 stabilizing until we hit ~3500 and that’s without a real economic recession (that’s just the result of QT and rising rates). If we see a real recession could see down to 2500.*

Right now one question is: at what point do market valuations trump inflation in terms of votes? Since there is a lot of the population that doesn’t own any assets and inflation impacts everyone, it might be a while (on the other hand those with power and influence own assets). That’s when the calculus will change. I could see risk assets getting hammered while the real economy is not as hard hit.

Pension funds are hurting this year, which has more political sway in my opinion than retail losing their shirt. That money will have to be made up from somewhere by local and state governments raising taxes or taking it from somewhere else. Or maybe they’ll just keep kicking the can down the road…

* = https://www.msn.com/en-us/money/markets ... ar-AAX7q93

[sky]

I guess it will hit 3600 in August and then hang for a while. It won't be too long before the tulip bulb mania takes off again. I will buy some dividend etf's in August, unless the prices go up too much.

[bridgebetween]

Deutsche Bank calling the low to be 3000 points later in the year, if theres a global recession.

[Stahlmann]

Isn't DB in big financial (credit) problems and the next Eurocrisis will be connected with it?
This title flashed to me in some way in 2020 (yea, I know current date ).
Should we listen to bankrupts?

[Michael_00005]

Moving to all cash earlier this year has been such a relief! I get the buy-hold mentality and even used to believe it, but having drudged though bear markets in the past, I knew the strategy was never meant for someone with my temperament. It's likely others will feel the same way:

If you're interested in learning a system for avoiding bear markets – DON’T let anyone discourage you from learning it!

The video from the 1st post covers many of the details, and for some it’s worth watching. If your already confident in your current strategy, or don’t feel the need to learn another – it’s going to be a waste of your time.

It's rarely a good idea to blindly follow a saying, for example: "you can't time the markets", most can't, but this certainly does not mean no one can. I sort of see it like a great sea caption who's spent their entire life on the sea. You put an average person in a sail boat in the ocean, and most will sink when a big storm comes, but there will always be a few who master the craft. They've been though many storms; they see signs when a storm is coming, and know how to prepare for it. They take the sails down when the wind picks up and becomes chaotic, and they only put them back up when the weather starts to clear. It can be done, people are doing it now.

--It looks like tech will be seeing another potentially big sell off tomorrow (5/24) given SNAP’s after market news.

[jennypenny]

I'm not sure if 'avoiding a bear market' is the right mindset. You can't avoid them, they happen with predictable frequency. Learn how to ride them out as calmly as possible. It's like leaning in a boat to counteract the waves ... lean, but not too much. I'd be wary of any systems that promise to make money during bear markets. I used to be a little more willing to take advantage of bear markets beyond 'buying low', but intervention in markets is so commonplace now that I fear a change in policy might (suddenly) thwart an otherwise good strategy.

[rube]

Avoiding a bear market is easy and literally everybody can do it.
The real challenge would be to be able to avoid a bear market AND still make a good return over time.

[WFJ]

Tell me more. Can I subscribe to your newsletter?

There's an old joke "What do you call people who claim to buy at the bottom and sell at the top? Liars".

[rube]

Sure, I'll send you every week the same message: keep it in your savings account. Don't catch falling knives, yes we're still in a bear market. This just temporarily up, stay safe and keep it in your savings account. And on and on.

Sure you lose to inflation, but not in absolute amount. But you don't gain anything either. My point is, it's not only that you need to time when to get out but even more so when you need to be in. That is the hard(er) part.

[Michael_00005]

So IBD has changed it's stance to "confirmed uptrend" today, but they really will be looking for a follow through day(s) next week for confirmation. This is a trend developed by William J. O'Neil. And there are other indicators the market could be stabling, such as the count of new highs in the market, which has been in an upward trend for about a week, even though the market was going down. This implies that some company stocks are showing strength. It generally starts with a few, and then ideally more continue to join in and the trend reverses.

There's always a chance this is noting but a short bear rally, but as far as I'm concerned it's time to start adding risk.

Not much love here, but figured to follow-through with this for a bit longer.

fyi:

Tell me more. Can I subscribe to your newsletter?

This was probably a joke, but I'll clarify. This thread is about sharing a technique that is very helpful to me. There's no personal gain on my part; I'm simply enjoying learning a system the lets me avoid the larger part of any downtrend.