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Preparing For The Crash Of 2020

Sep. 17, 2020 9:38 AM ET3 Comments
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Strike's Blog
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Summary

  • We have entered the 'Kill Zone' (NASDAQ 10,700 - 11,800).
  • The market will crash this year.
  • One should slowly liquidate stocks or buy index Puts.

As I mentioned in various recent posts, the market is due for a severe correction or even a crash. I personally do not wish to liquidate my favourite stocks with strong long-term theses (such as ARWR, up 40 % yesterday), because my previous attempts to be clever -- locking in profits and hoping to repurchase lower -- have mostly failed. That's why I have held onto my precious metals (65 % of my entire portfolio) for dear life and have not tried to guess the extent of any corrections.

Why am I so pessimistic?

1. Because the U.S. market is a gigantic bubble fuelled by 'free money' supplied obligingly by the Fed. The higher the market is artificially inflated, the bigger will be the explosion when the bubble bursts.

2. The November presidential election has all the makings of socio-economic disaster, since Don the Con has already clearly and repeatedly announced he will not accept the results of an election defeat. The best case scenario is political gridlock; the worst case scenario is armed conflict actively encouraged by the current president.

My strategy is not to liquidate my precious metals holdings -- they will correct briefly in a worse case scenario, and will actually soar in a bullish scenario --, nor to liquidate my 5 - 7 year holds (ARWR, FATE, KALA, CHRS and so on), but to buy SPY Puts, allowing for a pre-crash, blow-off top of up to 15,000 on the NASDAQ and 5000 on the S&P. I don't expect the markets to reach anywhere near that high, but if they do then the out-of-the-money Puts will be the new 'free money'.

I am not an investment advisor, and my forecast could be completely wrong, so please make your own decisions and take responsibility for them. GLTA.

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