Current cycle -
The current QE-cycle has been unprecedented!
Between March '20 and Feb '21 (11 months!), most high flying stocks quadrupled, quintupled or more and over the past 2 months, they have declined by 40-70%!
During the upswing, years of gains were compressed,,,
The current QE-cycle has been unprecedented!
Between March '20 and Feb '21 (11 months!), most high flying stocks quadrupled, quintupled or more and over the past 2 months, they have declined by 40-70%!
During the upswing, years of gains were compressed,,,
...into just 11 months (stocks usually quadruple, quintuple or more over many years!) and this contraction over past few weeks (40-70% declines) has also been very abrupt!
Due to the size of QE, fiscal stimulus + animal spirits, the moves were exaggerated in both directions...
Due to the size of QE, fiscal stimulus + animal spirits, the moves were exaggerated in both directions...
...After the high flying stocks had run up so much so quickly and their valuations had become super stretched, it was obvious to me that future returns were going to disappoint. I shared this sentiment several times in my posts in late '20 and early '21.
This is why, instead...
This is why, instead...
...of 'buying and holding', I decided to lock in some of these crazy gains at the appropriate time in spring, hedged my entire portfolio in early November and went to 100% cash on 1 December.
I did this not because I'm a short-term trader but because this market cycle was so...
I did this not because I'm a short-term trader but because this market cycle was so...
...crazy that the entire upswing in high growth land got compressed into 11 months and I didn't want to be the 'sitting duck' on the way down.
Hopefully, the next cycle will be more normal and I then won't need to divest my entire a/c to preserve my gains. Hope this is useful.
Hopefully, the next cycle will be more normal and I then won't need to divest my entire a/c to preserve my gains. Hope this is useful.
Re-investment -
I've now started scaling into the beaten down growth stocks which have already been smashed and their multiples are now reasonable.
My plan is to slowly buy the other names on my 'buy list'...my timing won't be perfect, which is why I'm gradually scaling in.
I've now started scaling into the beaten down growth stocks which have already been smashed and their multiples are now reasonable.
My plan is to slowly buy the other names on my 'buy list'...my timing won't be perfect, which is why I'm gradually scaling in.
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