Putting numbers into perspective.

Yes, everyone says doomsday is coming in the market. It's going to crash further. 

But by how much?

Let's see the NASDAQ. It closed 10575 last Fri. That's down ~34% from all time high of 16023.  

Taking the resistance just before COVID and subsequent support of 9717 as the next major support, that's 8% down from current level (10575).

If there's a black swan event that crashes the markets, I am taking 6843 (COVID bottom low) as the lowest low. That's 35% and 57% down from current and ATH NASDAQ levels, respectively.

See plot and table for visualization.

This means we are slightly more than halfway from my worst predicted drop. In other words, when buying NASDAQ index fund/etf at this level, there's a risk of 8-35% dropping further - according to my simplistic calculations.

Now these are all (my) estimations, but it helps to have an idea of the expected risks in deciding what to do in a market downturn. Similar calculations can be done for SPX.

Seeing these numbers, understanding the downside, and knowing my time horizon is 5-10 years, these are my plans: 

- I will hold majority of my investments (stocks and ETF) through the crash and bear market. There's really no need to liquidate since I don't require the cash.

- I will add periodically at levels of support in a market crash, in particular, to index ETF like SPY and QQQ, and certain stocks in my portfolio.

- My hedging strategy continues to be cash covered puts and covered calls to offset losses.

There's no way to time the market. 

The best plan is to remind myself of the long term goals, treat this as an opportunity to grow my wealth and focus on achieving it.

$SPDR S&P 500 ETF Trust(SPY)$  

@TigerStars@MillionaireTiger@Tiger_chat