Monday, October 08, 2018 9:01:44 AM
Bigworld, A 100% bearish strategy can only work over relatively short periods of time -
That, combined with the fact that stock markets move higher over time, means that a 100% bearish strategy will only work 1) very infrequently and 2) only if you time it right. So the odds are not favorable.
A better approach, odds-wise, is what Warren Buffett does. Instead of trying to short, he keeps his long positions in place while letting cash build up when he can't find good values in the market. He's been building up cash steadily over the last several years and will deploy it during the next recession or big market drop.
It's a smart strategy since it puts him on the right side of the historical long term uptrend in stocks, and he also benefits during the periodic bear markets by buying stocks at big discounts. The only timing aspect of his strategy is knowing when to build up cash and when to redeploy it, which for Buffett is when he is or isn't able to find compelling values among individual stocks.
It's a great system for the stock side, but for people who need income from their investments (Buffett doesn't), the income can be obtained by stressing higher dividend paying stocks plus some bonds. Add in some real assets like real estate, gold, land, etc, and you've got a bullet proof strategy.
That, combined with the fact that stock markets move higher over time, means that a 100% bearish strategy will only work 1) very infrequently and 2) only if you time it right. So the odds are not favorable.
A better approach, odds-wise, is what Warren Buffett does. Instead of trying to short, he keeps his long positions in place while letting cash build up when he can't find good values in the market. He's been building up cash steadily over the last several years and will deploy it during the next recession or big market drop.
It's a smart strategy since it puts him on the right side of the historical long term uptrend in stocks, and he also benefits during the periodic bear markets by buying stocks at big discounts. The only timing aspect of his strategy is knowing when to build up cash and when to redeploy it, which for Buffett is when he is or isn't able to find compelling values among individual stocks.
It's a great system for the stock side, but for people who need income from their investments (Buffett doesn't), the income can be obtained by stressing higher dividend paying stocks plus some bonds. Add in some real assets like real estate, gold, land, etc, and you've got a bullet proof strategy.
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