You know how people say, everyone is a genius in a bull market? It’s time to check in on all the geniuses.
Fear index (VIX) is soaring, and we’re officially in bear market territory with NASDAQ down over 20% from its high. It’s time to sell expensive volatility and buy cheap equity.
VIX up 86% YTD
How to survive a bear market?
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If you’re buying shares, dollar cost averaging will help reduce the pain if the stock keeps dropping.
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Diversify your holdings. Is your entire portfolio in growth tech? Look into defensive stocks, dividend yielding cyclicals.
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Look into sectors that perform well in recessions. Consumer staples, energy and utilities. Financial sector can benefit the six interest rate hikes that are on the horizon.
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Focus on the long-term. Are you investing for retirement and it’s still 20-30 years away? In the long run, the bull markets will make up for the bears, as long as you don’t panic and run.
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Invest with defined outcome option strategies with high probability of winning and longer dated expirations (12-18 months). Sure it may not be as exciting as YOLOing into a single put, but a put spread will help you preserve your hard won capital and help it grow.
NASDAQ down 23% from peak
S&P 500 down 12.44% YTD
Dow Jones down 9.34% YTD
Positions: 30% VFIAX, 20% dividend portfolio
Example defined outcome strategy:
Hedged options spread on $BTU
76.1% Win probability
Make up to 31.8% (58.1% annualized)
50% cushion
Breakeven $9.88
Invest $1972.64
Buy 1 $19 call
Sell 1 $25 call
Sell 2 $10 puts
Exp 10/21/22
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