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  • Correction 2014: Are You Prepared? [View article]
    What I did in 2003-2008 was not trading and not investing, but something in between. Well, I guess it depends on the definition of investing. If you define investing as buying and holding for 10-20 years, this is not what I did. I tried to buy good stocks and hold them for 1-2 years on average. And this worked pretty well (I made around 70%) - till 2008. Then I simply realized that if you just hold portfolio of long stocks, at some point you are getting killed. In 2008, there was nowhere to hide. No diversification would help you in 2008.

    Now, you say that for long term investors it doesn't matter - I disagree. A lot of retirement portfolios were destroyed in 2008. And it might take years to recover. Some portfolios will never recover. And if they do, it might be just when the next crisis will come.

    Think of it this way: on average, you can expect to make around 10% in the stock market. If you make 10%/year for 6 years and then lose 40-50%, you are hardly back to even. The current bull market is not typical, it doesn't happen very often.

    Hedge will reduce returns most of the time. But if used properly, you will lag the market only slightly. Our Anchor strategy lags the markets by 2-5% in strong bull years, and matches the markets returns in neutral to slightly positive years. But it returned +4% in 2008, compared to -38% of S&P 500. This is HUGE.

    What I'm doing with my non-directional trading is completely different. I don't depend at all at market direction. But of course this is not for everyone. It requires much more time and effort, but I'm a full time trader.

    And yes, I completely agree about why 90% of the investors lose money. They try to time the market, act on their emotions, etc. But even those who follow the "rules" will still experience severe drawdowns once in 5-7 years. Depending on their holding, time horizon etc. some will recover, some won't. This is why I'm such a big advocate of hedging.

    "Or would you say that properly used hedging strategies work. That would also mean that properly investing without hedging also works."

    Properly used hedging strategies might reduce returns most of the time, but they will help you dramatically when you need them (once in 5-7 years). Properly investing without hedging also works - most of the time, EXCEPT for once in 5-7 years, when without hedging, you are getting killed.
    Jun 10 08:52 PM | Likes Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    @BBwetrust,

    Skepticism is always good, as this industry is full of crooks and charlatans. So each claim should be checked and verified carefully.

    All our trades are posted to members forum in real time. Those are real fills, not hypothetical returns. They are also verified by pro-trading-profits and you can check the returns on their website.

    However, since we are talking about options strategies, they cannot be implemented in multi-million dollar accounts, so unfortunately I will not be richer by Warren Buffet.
    Jun 10 10:20 AM | Likes Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    @mjs_28s and @22643611,

    I believe you completely missed my point.

    Yes, many people make good returns without hedging. How many? Well, there are different statistics, but over 90% of individual investors lose money in the stock market in the long term. The main reason is that they might make nice returns for few years and then lose it all in a big down year like 2000 or 2008. If you are among the 10% - good for you.

    The impact of not experiencing losses in down market years, while only slightly lagging (if lagging at all) in positive and neutral years, is astronomical over any extended period of time. Of course the returns depend on many things - when you started is not the least important. Those who started in 2009 might afford some losses after accumulating nice gains. What about those who started at the peak (2000 or 2008)?

    I appreciate the advise about hiring PR person, but I just let my returns to be my PR. I also let my members to speak for me - http://bit.ly/P72HgM. SteadyOptions is ranked #1 out of 700+ newsletters.

    @22643611, when you said "anybody with a lick of sense can do well in a bull market." you probably missed the part where I mentioned that those returns have been achieved without taking any directional risk. I trade non-directionally, I DON'T CARE what the market will do. In fact, my best month was August 2011. And I actually have been trading since 2003, not 2011. I had pretty good success trading stocks in 2003-2008 and then lost huge in 2008. This was a wake-up call. I realized that I don't want to depend anymore on what the market does.

    If my previous post insulted anyone, my apologies, this was not the intention.
    Jun 10 10:12 AM | Likes Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    I guess anyone can claim any returns. Words are cheap. My returns are on my website, for everyone to see http://bit.ly/MXsvon. 110% average annual return in the last 3 years, without taking any directional risk and without a fear of correction of bear market. For the skeptics: every single trade documented in real time.
    Jun 10 12:23 AM | 1 Like Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    I guess some people simply don't learn and have very short memory.

    Good luck with your "long term" strategy.
    Jun 9 01:44 PM | Likes Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    You realize that if you are up 100% and then down 50%, you are back to even, do you? That's assuming you are compounding, which is the whole point of investing.

    I agree that you cannot time the market, but this is not what I'm suggesting. I'm suggesting that even long term investors should be hedged and protected all the time. Wouldn't it be nice if your portfolio could be up nicely in 2008 when everyone else was killed? This is exactly what happened to those who were hedged.
    Jun 9 12:13 AM | Likes Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    22643611, C is just an example. There are dozens of stocks that are still below 2008 levels. C was considered a very conservative stock in 2007.

    C is now 90% down from 2008 levels, do you really believe it will recover, even in 20 years? Oh wait - it's not a loss because you haven't sold yet, right?

    How did diversification help you in 2008 when everything was down? There was no place to hide.

    The ONLY way for the long term investors to make money is to be prepared and be hedged all the time.
    Jun 9 12:08 AM | 1 Like Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    There are few things you can do.

    What I personally do is trading options only. I don't care at all about direction, I don't care about rallies or corrections. This strategy served me well - 110% average annual return in the last 3 years - http://bit.ly/MXsvon

    if you still want to own stocks, you need to be protected. Take a look how we do it with our Anchor Trades strategy - http://bit.ly/1i9K990

    In my opinion, owning stocks without some sort of hedging is like driving a car without insurance.
    Jun 9 12:01 AM | Likes Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    Keep telling yourself that unrealized loss is not a loss and see you when your portfolio balance will be down 40-50%. I promise you you will sing a different song.

    Most investors think they are prepared to lose. Are they? Are they REALLY prepared? Read this to find out - http://bit.ly/1pSXlGI
    Jun 8 11:39 AM | 1 Like Like |Link to Comment
  • Correction 2014: Take Cover [View article]
    The strategy suggested by the author (buying puts and financing them by covered calls) is a well know options strategy called collar. It's not a bad strategy - the problem is it limits your upside in case the stocks continue higher.

    We implement a better strategy called Anchor Trades. It involves buying long term puts and financing them by selling short term puts in a certain ratio. This strategy produced 117% return in 2007-2012 compared with 30% of S&P 500. See details here - http://bit.ly/1i9K990.
    Jun 8 11:07 AM | Likes Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    It's interesting to read all the comments. Some people think they can predict the future, by telling you that there will be no correction, or when the correction will come.

    I can assure that there are only three things that are certain:
    1. The next correction will come sometime;
    2. The next crash will come sometime;
    3. Nobody knows when this sometime will happen.

    My strategy is just to be prepared ALL THE TIME. Anyone acting differently, is fooling himself and others. Anyone saying that you don't have a loss till you sell is fooling himself. A loss is a loss, realized or unrealized.
    Jun 8 12:10 AM | 2 Likes Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    7-10% corrections are not the issue. On hindsight, those are buying opportunities. The big question is how do you know in REAL TIME that this is a 10% correction and not beginning of something bigger? When it's 20% - is it still correction or a bear market? What about 30%? 40%? Can anyone be sure that the markets will recover like they did after the 2008 crisis? Can anyone be sure how the next crisis will look like and how long will it last? Don't you prefer to be prepared instead of guessing?
    Jun 7 06:55 PM | Likes Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    Isn't it exactly what people were saying in 2000? Haven't we learned nothing from the previous crashes?? Amazing how some people have a short memory loss after the markets went virtually one was on the last 5 years..
    Jun 7 11:46 AM | Likes Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    Tell it to people who entered the markets just before the big crash of 2000 or 2008.. Many people owned quality stocks like C in 2007. C was trading at pre-split price of $50, that's $500 at today's prices. How long will it take to get back to those levels? Decades. Most people don't have that kind of time.
    Jun 7 10:18 AM | 1 Like Like |Link to Comment
  • Correction 2014: Are You Prepared? [View article]
    The problem is that corrections and bear markets come when nobody expects them. I always build my portfolio on a principle "I hope I'm right but what if I'm wrong?" Those who are always prepared are those who will make money in the long term.

    The impact of not experiencing losses in down market years, while only slightly lagging (if lagging at all) in positive and neutral years, is astronomical over any extended period of time. Even in prolonged bull markets, the returns should still be positive and lag negligibly behind. The peace of mind which comes with being fully hedged more than compensates for the potential of slightly underperforming the market as a whole in prolonged bull scenarios.
    Jun 6 09:50 PM | 1 Like Like |Link to Comment
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