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Why? The market is going to drop 27%... Explain this, while the market isn't cheap and certainly has some room to fall, that is a big fall you are predicting.
Infinityproninja said:
Read a book or two, follow the thread, watch CNBC most of the day is how I got startedproninja said:
......and become a robot because the minute you become emotional, you are in trouble.Read a book or two, follow the thread, watch CNBC most of the day is how I got startedproninja said:
Or you could rebalance your 401k to be more aggressive during a week where the market falls 5%
It's highly unlikely that we're going to drop that much, but a pretty big drop isn't out of the realm of possibility if you consider the bigger picture. The market is up ~125% from when the Fed starting intervening in late 2008. Who knows how much of this run up was due to their actions, but now that they're done inflating things it stands to reason that we give some of it back.
I pulled my wife's 401K to the sidelines in Sept. I was hard leaving it there through the subsequent run up, but I'm glad I did, at this point. May put it in Treasuries or something until I feel the craziness is over.
I wouldn't go all in, but a piece of a Roth makes sense to me. Historically its been up to 100x that price. Hitting that return tax-free would be really sweet.
It does have to bounce back at some point and will probably bounce back pretty high due to the under investment happening right now. US crude has proven more resilient than people thought and it's easier to turn on and off which should help with some shocks. The bigger issue is trying to time it. Oil doesn't act like most commodities. Not like gold where you can but and hold. You have roll risk, storage risk, etc and buying physical oil isn't very practical. So you are better off buying companies but you essentially have to pick a bottom and which companies can last at that price? Offshore drillers? Canadian sands?proninja said:
I've been watching UCO and waiting since it was $14 in October and it's hard to wait much longer. If nothing else, the long should be great but there is still some room with the market looking down. What are some stock or fund recommendations for handling this downturn?
Wouldn't a reasonable strategy be to keep 50% indexed and 50% in a bond fund and/or horde cash to rebalance and/or deploy if the market crashes 20% or more? Your strategy sounds like gambling.cosjobs said:
It is gambling, I am a bit of a risk taker. But 60% of my net worth is in real estate, 20% in a very conservative 401K (currently in cash on sidelines), and 20% high risk/high reward. The 20% HR/HR is what I outlined above. If I hit big, I can retire a few years early. If I miss and lose 25%, i can retire as scheduled in five years. I won't lose more than 25% of the 20% HRHR account, which is only 5% of my net worth.
UCO could lose money due to fees and decay right even if oil prices were flat.
Got it. I have no idea how things will turn out, and I apologize for not reading carefully. But, the opportunity cost of say 6% indexed needs to be factored in if most of your money is on the sideline.
Or, another way, You'd need an indexed fund to go up 16% from today through the rest of the year to get 6%. If I jump back in Monday, I only need it to go up 6% to make 6% this year.
I'm certainly not recommending it to anyone else, just chronicling it for your entertainment. Never do this risky stuff unless you could put it in a pile and burn it and still have a decent retirement. Same with any other gambling.
Plus, you have kids and I have dogs. Easier to outlive and fewer expectations before one of you dies.
Based on this it sounds like shorting it long term would be profitable, no?
Apparently all the 'oversold' conditions are as high as ever yet any rally is getting sold quickly.
You want steady and small price direction when you're long, short too. Short, you're also going to need zero percent borrowing costs and a forgiving broker.
That's a new one.
