Investing in a Bubble

[yuvaltaylor]

What do you think would happen to your strategy if we had a re-run of 2000-2003 or 2008-2009 last spring?

I think my strategy would thrive in a rerun of 2000-2003 and utterly fail in a rerun of 2008. But the bounce back (the 2009 scenario) would be massive.

Do you have any protection from the downside in your strategies?
Or do you just ride to the bottom with the equities market (whatever that bottom would be), hoping that following returns will cover the drawdowns?

I just ride to the bottom. My biggest percentage gain of the entire year last year came the day after my portfolio hit bottom. If I were to put some of my portfolio into cash at some point along the way down, I would have missed my biggest opportunity for gain.

What is your plan for the times when hell breaks loose?

Remain fully invested and ride it out. It has worked for me in three small-cap bear markets so far (February 2016, December 2018, and March 2020, in all of which the Russell 2000 lost more than 20% of its value). In none of those cases did I lose as much as the R2000, and in all three I walked away with major gains a few months later.

[InspectorSector]

For the benefit of those who are not as old as I am, the market this week reminds me very much of the first few months of 2000. At that point in time, the fish were jumping into the boat. I made 3.5x my money in three months trading on breakout/pullback. That went on for a few months then we had the dot.com crash. I am not saying that we are going to have the same thing happen here, but the market action is eerily similar. We are entering a stock pickers dream. Enjoy this for the next few months but watch out come spring time.

[sthorson]

^ +1