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Trade Alert: And a playbook for into year-end

October 18, 2018 by Cody Willard Leave a Comment

Remember a couple days ago when the DJIA bounced 500 points and I’d mentioned that if you’d been losing sleep when stocks had been crushed down in a straight line last week that you probably should lighten up?

Well, today the DJIA was down 500 points and the bounce is already gone.

I’ve outlined my expectation that the market could be rangebound with a downward bias into year-end as I’ve also outlined that I don’t expect the Bubble-Blowing Bull Market is completely over just yet. And I’ve also outlined how even if the Bubble-Blowing Bull Market is over that it doesn’t mean that stocks will crash like they did in 2002 and like they did again in 2008 when the previous two bubbles popped and stocks crashed. And even so,  you guys know that I’m always looking to be opportunistic and find Revolutionary companies when their stocks have been crushed and/or when there are huge opportunities of growth ahead regardless of the broader market/economic cycles.

And in my personal portfolio, I’ve raised a bunch of cash over the last few months and I had been adding index put options to help hedge on this downturn that I’d expected into year-end. Last week, as stocks got smashed in a panicky sell-off rout, I trimmed more than half of those puts.

So here’s the playbook for me for now, along with one opportunistic nibble on our newest addition to my portfolio.

I’m holding onto the rest of these puts for now but if the markets tank another 2-3% or get hit in another panicky sell-off, I’ll trim more of these puts and maybe even scale out of up to about 90% of the puts I’d bought originally. I’m not going to sell all of them and I might even roll into some lower strike prices if the markets rally again from these levels in the next week or two. Again, I’m just being a bit cautious as the markets have been in a ten-year Bubble-Blowing Bull Market mode and many middling stocks have valuations that remain sky high, and so on.

Meanwhile, if stocks do get crushed again in the near-term, say if the markets are down another 3-5% from here in the next few weeks, I’ll likely start nibbling some of the names I’d trimmed when stocks were at their all-time highs over the course of this year. I’ll send out a “Where I’d like to add more to each of our positions” post — including that I’d like to buy some more Twitter if it’ll get closer to $25 and so on.

Finally, I’m going to nibble a second small tranche of SNAP, making it a slightly bigger very small position in my portfolio. Here’s the write up from the Trade Alert on Snap last week in case you missed it.

Be cool, be careful, be prepared. Have a playbook.

PS. If you don’t own any gold and/or GLD, you might consider nibbling some of it sooner rather than later too.

 

 

 

Related posts:

Trade Alert: Buying some more protection
Trade Alert: The futures of bitcoin
Trade Alert: Two more trims AND Why cryptocurrencies like bitcoin are about to crash again
Trade Alert: Headlines and finally adding to this position
Trade Alert: Covering Some Shorts In The Reflecting Softbank Sun Light
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Filed Under: Trade Alert

Disclosure: At the time of publication, the firm in which Willard is a partner and/or Mr. Willard had positions in some of the stocks mentioned above although positions can change at any time and without notice.

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This does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or cryptocurrency or token any other product or service by Cody Willard or any other third party. Furthermore, nothing in this is intended to provide tax, legal, or investment advice and nothing in this should be construed as a recommendation to buy, sell, or hold any investment or security or cryptocurrency or token or to engage in any investment strategy or transaction. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your business advisor, attorney, or tax and accounting advisor regarding your specific business, legal or tax situation.

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