Tips for surviving a correction

[fenders53]

(03-04-2020, 04:54 PM)NilesMike Wrote:

(03-04-2020, 10:37 AM)fenders53 Wrote: I'm pretty sure I'll hedge a little more in the future.  It's as tricky as any part of investing though.  You can spend a lot of money for insurance over time waiting to be right.  The whole thesis for my covered put selling income strategy is taking premiums from those buying "insurance".  I agree that the risk was most obvious last month Otter. 

We have mostly been at all time highs since May 2013.
The risk was no greater in february 2020 than it was when SPX was at 2100, 2400, 2700, 2900 or 3,000. I do not fight the tape.

ATHs don't alarm me so much.  The market is generally up and to the right over time.  Continuous ATHs + no earnings growth does cause me to be more conservative.  Some multiple multiple expansion is OK.  To my knowledge we have never seen rates this low with a generally strong economy.   There is some limit to how much expansion I am comfortable with.  At some point we revert to the historical mean, or at least head in that direction.  I was pretty sure we were due for some correction soon enough, in spite of the tape.  

I do intend to hedge some when the time seems right.  l will never go all in on that idea though because you are fighting the tape.  Buying options is always gambling and you are not the house.  I'll get it wrong more often than I will get it right after premium decay is factored in.