I had a new thought last night that of course during upcoming turbulent markets when you expect that things may get bad its better to go maybe 80% cash and then trade with 10 to 20%.
Basically half the battle in investing is preserving what you already have and not necessarily going for huge gains, especially in crappy times.
Yes, you may miss out on rallies if you're 80% cash, but I don't see any new sustained bull markets happening any time soon!
So my idea is this.
Maybe 80% cash in money market where it's totally liquid.
Then I play my hand and gamble with very small amounts to very slowly add to my existing balance.
Yes, adding $500 here and there is not much but I'm also preserving 80% of my hard earned money while others may lose 40% if the sp500 sells off in the upcoming months.
My method is something like this.
80 to 90% cash in mm.
Then I put 10% or whatever in QQQ.
I wait.
As soon as I gain $500 or so I sell and am patient again and wait for a sizeable drop. Maybe 5 to 10%.
Then I reenter and do it again.
This could also be done with a stock like aapl or unh or something.
This way I'm gambling with only 10% of my money and preserving 90% through a very volatile period that most see in 2023s first half at least.
Either that or I just hold the (QQQ) with 10% and add little by little on large dips.
So I'm effectively preserving my 90% (Maybe that's a bit high!ĺ) and then only 10% is “sloshing around”.
If we go down 30% eventually ( by February or March 2023) then I move more into QQQ . Maybe 20% more or something.
Ride it up and then trim a little if we get back to present levels?
Just an idea.
Leave a Reply