# Anyone planning to short market for 2014 secound half decline ?



## lonewolf (Jun 12, 2012)

Is anyone planning to short the stock market for 2014 decline ?


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## Moneytoo (Mar 26, 2014)

I was thinking about it, but decided it'd be better to just buy stocks/etfs if/when they're cheaper (keeping extra cash for this ) If I had more investing experience maybe I'd try shorting, but from what I read seems too complicated&risky...

What about you?


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## HaroldCrump (Jun 10, 2009)

I already shorted anything that moves (S&P 500, TSX, CAD$) - on paper - via kcowan's 2014 Predictions Contest :biggrin:
As you can imagine, that aint going so well thus far :stupid:

In reality, I am fully invested and not short anything (other than a few covered calls).
However, I do have a cash position within my trading accounts.

I consider cash as a call option on a market correction.


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## Jacq (Feb 8, 2014)

I've thought about it but I'm not sure if that's wise. Although it doesn't have anything to do with aligning of the planets etc., Ken Fisher wrote a convincing article on the bullish side on Forbes:
http://www.forbes.com/sites/kenfisher/2014/06/18/investors-expect-a-great-fourth-quarter/
Also I'm sitting out the summer and have more cash than ever before right now. I think I'll be going short-term and highly selective in the fall.


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## lonewolf (Jun 12, 2012)

Moneytoo

I think playing the long side is the risky side for the rest of the year. Buying a crash ticket with put options I think offers a better opportunity to make it rich then holding long for the remainder of 2014. Of course do not bet the farm only a small percentage. Most holding long will have over 2% of their portfolio long a 20% drop or more will cause them to lose more money then if a player is playing the downside with 1% or 2% of their portfolio. If the market does crash I think playing puts would make as much money as a strong rally into year end. My view of the market says the time is now to play the downside till the end of Oct 2014


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## Moneytoo (Mar 26, 2014)

lonewolf said:


> Moneytoo
> 
> I think playing the long side is the risky side for the rest of the year.


Well I have ~20 years horizon, so I'm thinking if I buy BCE at $49 and Loblaw or Manulife or some other big company from my watchlist - it'd be better long term than if I bet and lose (besides, from what I read Canadian stock market doesn't have that many options as US one, and I'd rather spend USD on a good company/etf ) We have a few limit orders and plan renew them till October if they don't get filled during summer, but I don't think our accounts are even set up to trade options...


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## My Own Advisor (Sep 24, 2012)

Nope. Buy and hold regardless of what the market does. If the market goes down, I'll turn back on some of my DRIPs and get the same stocks at cheaper prices. That's about it to my strategy. Very boring actually.


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## Ethan (Aug 8, 2010)

I'm fully invested, as always. Technically I'm more than fully invested because I use both margin and short put options.

I do have room in my margin accounts to borrow or to sell more put options. If the market corrects, I'll sell uncovered put options and invest the proceeds.


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## MoreMiles (Apr 20, 2011)

lonewolf, every month since a long time ago... you keep starting a new thread about "markets crashing, run... short..." You have not been right for many many times so far. You remind me of that pastor predicting the end of world so his followers sold everything to wait and wait and wait... lol.

You will be right eventually...a broken clock gets the time right twice per day. The problem is, most people go broke if they short or bet at the wrong time. You might as well ignore the market fluctuations and focus on the long-term uptrend strategy.


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## lonewolf (Jun 12, 2012)

History should repeat
I feel most complacent when everyone is fear full.
Now everyone is complacent & I feel fear full like I did in late 2007when I shorted the market through to the 09 low.
All that has to happen now is for the money to start coming in as the bear takes hold. Then history will have repeated


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## Canadian (Sep 19, 2013)

lonewolf said:


> Now everyone is complacent & I feel fear full like I did in late 2007when I shorted the market through to the 09 low.


Where is there fear? In late 2007 the U.S. was plagued by extravagent mortgages extended to even those with household incomes below the poverty line. Wall Street was even betting on their shady loans by securitizing CDOs and betting against their decisions with credit default swaps. Ratings agencies gave insolvent companies AAA ratings. There were clear signs that something bad had to happen. So, what is happening in the current global economy that would cause a similar decline?


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## Moneytoo (Mar 26, 2014)

MoreMiles said:


> lonewolf, every month since a long time ago... you keep starting a new thread about "markets crashing, run... short..." You have not been right for many many times so far. You remind me of that pastor predicting the end of world so his followers sold everything to wait and wait and wait... lol.
> 
> You will be right eventually...a broken clock gets the time right twice per day. The problem is, most people go broke if they short or bet at the wrong time. You might as well ignore the market fluctuations and focus on the long-term uptrend strategy.


Garth Turner, apparently, has been predicting real estate crash for more than 6 years. Some people leave comments that they bought and sold during this time (making profit), some even paid off their mortgage already, yet he remains stubborn: http://www.greaterfool.ca/2014/06/17/stubborn - and many thank him for saving them from what most likely would've been the biggest mistake of their lives. 

Time will tell, of course, but I personally am grateful to posters like Pluto and lonewolf - who keep reminding that "what goes up must come down". I cringe when I read advice to "go all in" and who cares what happens if you have long term horizon. People are different, and not everyone can stomach correction or the crash - no matter how many people tell them that it's nothing to worry about. 

I'm glad that we started with individual stocks. Some went down right after we bought them - and no matter how I tried to explain to my husband that we should buy some more "at a discount" - he just couldn't do it. And he's an intelligent, not overly emotional man. Glad that he didn't sell anything - yet 

My point is, it comes with experience. And it's better to test how you'd react to 10-20% drops on smaller amounts. A lot of people (who I guess never come to these forums since they "got burned") were buying high and selling low. The same will happen to many of those who've been "successful passive investors" during the bull market. 

If I werent a chicken, I'd try options...


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## lonewolf (Jun 12, 2012)

Canadian said:


> Where is there fear? In late 2007 the U.S. was plagued by extravagent mortgages extended to even those with household incomes below the poverty line. Wall Street was even betting on their shady loans by securitizing CDOs and betting against their decisions with credit default swaps. Ratings agencies gave insolvent companies AAA ratings. There were clear signs that something bad had to happen. So, what is happening in the current global economy that would cause a similar decline?


 Hi, Canadian

I m the one with the fear. I seam to get it @ important highs.

Why I see complacency

When I look @ price pattern on the S&P I don't see fear. Each correction seams to have gotten smaller & smaller as investors have been programed to buy dips.

Margin Debt not sure where it is now but was recently @ all times highs
Investor intelligence advisor survey: Beginning of June over 62% bulls, Since 1987 only 3 readings above 62, the other 2 were 2005 before real estate top & before the 2007 historic top in stocks.

According to Aon Hewit who tracks 401k investments @ large corporations, plan participants are directing 67% of their new contributions toward stocks highest reading since March 2008 - 5 months after historic market peak.

S&P 500 bull/bear ratio has been above 3 recently (google Yardeni bull/bear 2014

Historical low vix readings

Put/call ratios is heavily in favour of calls

greedometer readings ( not experienced with this indicator but has hit highest reading ever )


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## Pluto (Sep 12, 2013)

For me shorting is out of the question. This is not a bear market, and it is unwise to short it. I'd want to see an obvious end to the bull market first. There is still way to much stimulus for this market to turn into a bear market.


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## Belguy (May 24, 2010)

From many years of investing, here is what I have learned. Pay particular attention when establishing your target asset allocation and then just stick with it through all market conditions and don't try to time the markets. However, I expect that you will each have to learn your own lessons in life based on your own particular experiences. The markets rise and fall in the short term but generally rise over time. During the steep drop in 2008, I sold nothing and just hung tough. Am I sorry today? Not at all! Buy, hold and prosper.


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## doctrine (Sep 30, 2011)

I like the Fear and Greed index. It's at "Extreme Greed" right now - 95 out of 100. Of course, it was in "Extreme Fear" a month ago. It's very volatile, and not very useful, but entertaining.

http://money.cnn.com/data/fear-and-greed/


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## lightcycle (Mar 24, 2012)

Maybe it's me, but I count more bears than bulls as this bull market ages.

So I think the markets will continue to slowly move up just to frustrate everybody who believes otherwise.

So many people can't be proved right. That's just not how the stock market works.

(the above post made strictly tongue-in-cheek)


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## Belguy (May 24, 2010)

Now that we are entering the summer doldrums, trading will be thin and the big guys will be off on their yachts until September. Zzzzzzzz.

Sell in May and go away. Buy when it snows and sell when it goes.

As a buy-and-holder, I do neither but there is some evidence that staying out of the markets in the summer results in superior long term returns. Who knows?


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## lightcycle (Mar 24, 2012)

Belguy said:


> Sell in May and go away. Buy when it snows and sell when it goes.


Here's another one: "Don't fight the Fed".


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## Moneytoo (Mar 26, 2014)

_Unfortunately, says Colombo, “very low interest rates are notorious for inflating new economic bubbles that create the illusion of a recovery and growth, but end in crises when the bubbles pop.”*

So, risk. Lots of it swirling around us. Interest rate diddling, stimulus spending, debt binging and speculation. The only thing for sure is that it’ll end, to be replaced by new conditions. And most people will realize this when it’s too late to react.

I’ll take prescient. *I have a Plan B*._

http://www.greaterfool.ca/2014/06/22/stress

Wonder what Garth' Plan B is...


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## Belguy (May 24, 2010)

And so, what are the big investors doing at the present time?


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## bgc_fan (Apr 5, 2009)

Considering the increase in the TSX index in the past month, I wonder if there are any investors regretting the sell in May approach.


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## Moneytoo (Mar 26, 2014)

#51 *Capt. Obvious* on 06.22.14 at 9:36 pm

_Folks, Plan B is diversification. Accept you can’t predict the future, diversify, invest with keeping costs as low as possible in mind, and rebalance when necessary. Make sure you have insurance. The solution is simple: keep it simple.
The problem in this country is too many people have “buy house and pay off mortgage” as plan A and no idea plan B exists.
_

Aw man - and I almost believed that there's a more complicated plan... lol


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## Moneytoo (Mar 26, 2014)

Belguy said:


> And so, what are the big investors doing at the present time?


Buying Hydroelectric Facility, for example: Innergex And The Desjardins Group Pension Plan Acquire The 30.5 MW SM-1 Hydroelectric Facility In Quebec   

I've been watching Northland Power Inc. (NPI) after reading this article: Warren Buffett Is Investing Further in Renewable Energy — Should You? 

I.e. I'm sure the big investors keep investing...


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## Beaver101 (Nov 14, 2011)

Belguy said:


> From many years of investing, here is what I have learned. Pay particular attention when establishing your target asset allocation and then just stick with it through all market conditions and don't try to time the markets. However, I expect that you will each have to learn your own lessons in life based on your own particular experiences. The markets rise and fall in the short term but generally rise over time. During the steep drop in 2008, I sold nothing and just hung tough. Am I sorry today? Not at all!* Buy, hold and prosper*.


 .. you forgot the :eek2: and :cool2: :encouragement:... oops better not let TO.Gal sees this post. :biggrin:


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## Pluto (Sep 12, 2013)

Belguy said:


> And so, what are the big investors doing at the present time?


Here is an article about Buffett's problems. 

http://www.bloomberg.com/news/2013-...lion-cash-pile-provides-acquisition-fuel.html

I know you are happy with a buy and hold, and that you held through he last crisis, and some years later you were happy to be back to where you were before the crisis. But wouldn't you be even happier had you bought a significant amount of stock at the low prices of 2009? Buffett is of course known for "buy and hold" but that's not all he does. Around 2009 he bought share in a Chinese oil company. Some years later he sold it for a huge profit. So he also buys on bad news, and sells on good news to people who feel safer buying at higher prices...He buys low, and sells high. On that trade he said, "my timing was terrible". Even with "terrible" timing, one can make some very good trades. How so? Focus on value. It isn't about timing. Its about value. Buy bargains. Bargains appear in abundance during a crisis. Think about selling some or all when they are no longer bargains. Raise some cash. Get a margin account. Get ready for the next bargain hunting season. 

On youtube there are countless video clips of Buffett explaining what he does and why he does it. 

Anyway, I'm not against your buy and hold approach but I just think that with a little adjustment you could do even better. Load up when they are on sale, lighten up some when prices are extraordinarily high. Retailers buy wholesale, and sell at retail prices. My lament is, I don't understand why investors are so inclined to buy stocks at retail prices, rather than wholesale levels.


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## Synergy (Mar 18, 2013)

Pluto said:


> Load up when they are on sale, lighten up some when prices are extraordinarily high.


Would this not occur naturally as Belguy rebalances his portfolio - buy low (undervalued), sell high (overvalued)?


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## lonewolf (Jun 12, 2012)

Belguy said:


> And so, what are the big investors doing at the present time?


 Belguy

Crawford predicted the high to the day in 1987 months in advance Then a tremendous crash to follow, Was market guru of the 90s out performing the S&P, Made money in the 2000 - 2002 bear market, Then went long into 2007, was rated number one for I think it was all of the bear market of 2007 - 2009.

@ Crawford Perspective under latest interview that was taken in June he says he is expecting a crash with in the present Mars- Uranus potential crash cycle, Most likely time June/July/Oct (free recording)

In 07-09 I subscribed to 3 market letters Crawford Perspective, Tim Wood @ cyclesman & Elliott wave international all 3 had their investors go short near the top in 07 & switch to long within days @ the 09 low (S&P & or DJI)


@ cyclesman.net a May 27 free recording Tim thinks this bull market is soon to end badly worse then the last 08 crash

Elliott wave international (Bob Prector) you tube video made end of Dec 2013 says he says something like 2014 we would see the 08 or 09 lows broken

Will history repeat again & investors that have a history of making money in crashes make money again & those that have a history of losing money in crashes lose money again. Just like stocks have their own way of acting with in bull & bear markets perhaps investors accounts have a precise structure & the value increases - decreases based on the cycles in the market, Some would do better in bear markets other do better in bull markets as well as where we are within the cycle.
Late in a bull cycle most portfolios might do the best. This is the part of the cycle I do the worst & take a correction in my portfolio as it gets ready to lift off as I prepare to go from bull to bear


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## Synergy (Mar 18, 2013)

lonewolf said:


> This is the part of the cycle I do the worst & take a correction in my portfolio as it gets ready to lift off as I prepare to go from bull to bear


Have you compared your historical returns to what they would have been if you followed the "buy & hold" and rebalanced strategy over the same period? How did you do over the last market crash?


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## favelle75 (Feb 6, 2013)

No shorting for me. If stuff drops considerably, I'll add to my positions that need to be added to. My shortlist to add to is BCE, CCO, TOG, POT, and CNQ. If any of those drop a lot, consider me a buyer. But no way in hell am I selling the shares I currently own.


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## uptoolate (Oct 9, 2011)

save, buy, hold, sleep well and prosper...


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## Pluto (Sep 12, 2013)

Synergy said:


> Would this not occur naturally as Belguy rebalances his portfolio - buy low (undervalued), sell high (overvalued)?


I get you. Yes. That's not really buy and hold, but you are correct.


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## Moneytoo (Mar 26, 2014)

Funny:

_Buckland, one of the authors of Citi’s “vox populi” report, notes that periods of calm don’t always presage turmoil. In 1995, for instance, the fear index was also low. The S&P 500 ended that year up 38 per cent, including dividends.

Then there is this line of argument, offered up in a June 13 report from Charles Schwab: With more people worried about the lack of worry, maybe it’s the wrong time to worry._

Uneasiness grows over Wall Street’s perceived lack of fear


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## lonewolf (Jun 12, 2012)

not sure if this down loaded


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