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Thread: So far my plan seems to be working

  1. #1

    So far my plan seems to be working

    First some background info about me.
    I am retired, so I do not have the luxury of riding out major dips in the market. It is paramount that I avoid big losses.
    100% of my investments are in my IRA accounts, so capital gains and taxes are not an issue.
    I am using Schwab's NTF ETF's, so commissions and fees are not an issue.
    So much for the background: this is my strategy. When I buy an ETF, I immediately place a 10% trailing stop order on it. This way as the price goes up then the stop order moves up along with it.
    Well, early last Thursday, I got "stopped" out of all my holdings and went 100% into cash. So I missed the debaucle on Friday and Monday.
    I have now placed "stop Buy orders" to get back in at lower prices than I sold out at.
    So when the cycle completes itself, I will have the same number of shares, in the same allocation, but at a lower cost basis.

  2. #2
    I am feeling pretty cocky, since my plan is working so nicely for now.
    But my fear is that when I buy back in and place a new 10% "trailing stop orders" that the market will resume its downward spiral and I will once again get "stopped" out of the market and all my planning will be negated.
    Do any of you have any advice for me concerning how best to re-enter this market?? I really would like to avoid the proverbial "catching a falling knife".

  3. #3
    August/Sept/Oct are the worst 3 months historically. "Go away in May" people will not buy back in until late October or early November.
    With the steep bounces it seems very hard to buy back in before things recover enough that there was little point in getting out.
    I have read/listened to multiple TA analysts predicting a 2-3 day "tradeable" bounce followed by the market moving back down over the next few weeks. I have decided not to play in this correction and am going to wait the 2-3 weeks and re-evaluate.
    I heard one radio show this week with a "cycle expert" who said this could be the top end of a long term cycle and we might not see this years peaks again until 24 years from now. Kinda scary.

  4. #4
    OK, you had a successful cycle...so far.
    But there will come a time when you buy back in...right. Let's say that is tomorrow, and you dutifully add your stop loss orders in place.
    Now, if the market tanks quickly by 10% or more, and you are stopped out again, what if the market then quickly turns and goes back up? You are now in a conundrum. For you do not want to buy back when you just lost 10% on the stops.
    So you wait.............and perhaps wait... for the market to return to you.
    But the market may be galloping along to new highs. In fact, it may go up for the next decade. And you are still waiting. It is psychologically almost impossible to buy back in at higher prices, stuff you got stopped out of.
    Markets today are not immune to "flash-crashes", which could obliterate your portfolio within hours, and the market back at its pre-flash position.
    Thus, the great risk you are undertaking is that you may be out of the market... forever. And your bonds getting obliterated by inflation.
    Perhaps you reluctantly decide to start buying back in, but I can assure you it wont be on trying to "beat the market" via stop-loss investing.

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