Wearing gloves to catch falling knives

Catching falling knives is somehow frowned upon by the "experts" in investment field.

It's deemed as a reckless act, as when we catch a physical falling knife, we will likely failin catching it and will end up injured for nothing as we are cut by the sharp edge. 

It is advised to pick up the knife only when ithas fallen flat on the ground to prevent any injury. 

When we translate it to investing, it will mean to only start buying when the prices stop falling and the price is flat or going up. 

In theory, it's perfectly sound. But is it practical? Can we always time the bottom And catch the rallies?

Personally, I do not have the confidence To time the bottom. I did try to catch and call bottoms when I was starting out in investing, more often than not, the ship left without me. 

Technical analysis is supposedly used to catch or time the bottom, However, those who often use tech analysis would likely come to the conclusion that tech analysis is a probability game. It can improve the odds of getting the direction correct, but there's no guarantee. 

Fundamental analysis can gauge the value and viability of the position, but it also can't be used effectively to time markets. 

In view of the limitations, how so do the market "gurus" & "experts" predict the market movement? 

I do believe that many are making educated guesses Based on their experiences, preferences, specialities etc. At the end of day, its still guesswork. See how long did Micheal burry shout that the end is coming. Same goes for Robert kiyosaki. See what's Cathie woods doing. If they are so good, why the markets do not move according to their predictions. 

If the "experts" are also doing guesswork. What do small fries like retail investors do?

To me, I believe in catching falling knives Bywearing gloves Since I can't time the markets.

How so?

Stocks:

1. Every 1-2 days that market trend down, I will Buy more to add to my stock portfolio 

2. Add small quantity per transaction, so that there is sufficient firepower to keep on adding 

Options:

3. alternate between Selling put options instead of buying stocks, so that portfolio margin can be utilised instead of using cash to buy stocks. 

4. Selling OTM put options so that there is buffer of safety 

5. Rolling ITM put options In the event that stock plunge below option strike price. Buy time for the stock to recover or reduce the losses. 

6. Selling call options to reduce the impact of market falls. 

Bear markets are the best time for us to buystocks at great discount. 

Although catching falling knives is in generalbad advice according to the experts, however if we are unable to time the markets successfully, getting our hands bloodied and performing DCA could potentially be better for us in the long run, then to let the ship sail away without us.

well, that's my 2 cents. Invest safe everyone.

# What would you do in a market crash?

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment82

  • Top
  • Latest
  • Jadenkho
    ·2022-10-05
    Thanks for sharing🥂
    Reply
    Report
  • BillyWilliams
    ·2022-10-05
    Very interesting analysis, thanks for sharing the points.
    Reply
    Report
    Fold Replies
    • JemLIm
      cool
      2022-10-05
      Reply
      Report
  • CKF68
    ·2022-10-09
    There r no perfect methods. Just have to learn and pick one/some fhat suit yr personality
    Reply
    Report
  • Snakewood
    ·2022-10-09
    😱😱😱🤦‍♂️🤔🤔💪🤞🤞🙏🙏
    Reply
    Report
    Fold Replies
  • Ramesh30
    ·2022-10-09

    Ok 

    Reply
    Report
    Fold Replies
    • ppp00
      ok
      2022-10-10
      Reply
      Report
  • Ericdao
    ·2022-10-07
    U still can time yr entry by TA. FA to pick on the good stocks u feel good. Be discipline, follow the rules
    Reply
    Report
  • HilaryWilde
    ·2022-10-07
    Reducing the amount of money in a single transaction is really what we need to do.
    Reply
    Report
  • ElvisMarner
    ·2022-10-07
    As long as the market continues to fall, I will add to my position.
    Reply
    Report
  • DonnaMay
    ·2022-10-07
    You're right, bear markets actually give us opportunities to buy quality companies.
    Reply
    Report
  • Bonta
    ·2022-10-05
    @TigerStars [Bless][Bless][Bless]
    Reply
    Report
  • GerryLoh
    ·2022-10-10
    good sharing thanks
    Reply
    Report
  • WingCheong
    ·2022-10-08
    Great article. Thanks for sharing.
    Reply
    Report
  • DonnaMay
    ·2022-10-07
    Selling calls is a very useful strategy.
    Reply
    Report
  • Hengk
    ·2022-10-10
    you never know the bottom
    Reply
    Report
  • HzxS
    ·2022-10-09
    Yes good comment and advice
    Reply
    Report
  • Derrickola
    ·2022-10-09
    just catch only and dca
    Reply
    Report
  • Kerrisdale
    ·2022-10-08
    tks for sharing
    Reply
    Report
  • Tigercub
    ·2022-10-07
    Same same. [Sly]
    Reply
    Report
  • JQC
    ·2022-10-06
    [Like] [Applaud] [Applaud] [Applaud]
    Reply
    Report
  • AetherC
    ·2023-01-06
    Ok
    Reply
    Report