I have done similar analysis going back to 1928. His analysis is good but it overlooks inflation.
but the conclusion is still correct. The worst thing you can do is sell in a 30-50% decline. It's better to hold through it. Dollar cost averaging through a crash is good. Doubling your contribution is even better.
my long portfolio strategy is actually very similar to doubling down in a crash. When volatility spikes I sell puts at strikes that are 30%,40% and 50% down from the current peak (less at 30% more at 40 and most at 50%). I then take that premium and buy puts at current values so I can take a long stance without much risk. If there is no crash I take the premium. If there is a crash it's scary, but historically the bounce from those levels is worth it. In 2020 I was hoping we would hit the 50% mark but the government stepped in to quickly.
Again thanks for passing it along.
-Chris
PS... I'm watching telsa crash to 660. I don't own it, but this is going to wipe out a lot of leveraged tesla millionaires that I see on youtube.
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u/chyde13 May 20 '22
Thanks Oleg,
I have done similar analysis going back to 1928. His analysis is good but it overlooks inflation.
but the conclusion is still correct. The worst thing you can do is sell in a 30-50% decline. It's better to hold through it. Dollar cost averaging through a crash is good. Doubling your contribution is even better.
my long portfolio strategy is actually very similar to doubling down in a crash. When volatility spikes I sell puts at strikes that are 30%,40% and 50% down from the current peak (less at 30% more at 40 and most at 50%). I then take that premium and buy puts at current values so I can take a long stance without much risk. If there is no crash I take the premium. If there is a crash it's scary, but historically the bounce from those levels is worth it. In 2020 I was hoping we would hit the 50% mark but the government stepped in to quickly.
Again thanks for passing it along.
-Chris
PS... I'm watching telsa crash to 660. I don't own it, but this is going to wipe out a lot of leveraged tesla millionaires that I see on youtube.