There are many write-ups and articles on how stock market performed during and post war period, there was not even one time market did not recover because the market never "die", very likely the impact on stock market from this war will not be different and market will recover and continue its trajectory. I guess the more relevant question should be..how do we ensure we survive during the crisis and enjoy the gain brought by post crisis recovery. Yes, this time is no different for the market, it may still be volative and go down more, but it will recover once the crisis is contained/resolved/or can be on going for much longer with no expectation of major shock. So will you be different this time?
Besides investing in financially sound and profitable companies, I now put into practice what I have learnt for so long but never have the gut to explore. I have decided to learn how to hedge my portfolio with inverse ETF [ CFD could be my next learning subject :)]. My main purpose is not to short the market or try to profit from the falling market, instead I would like to protect my portfolio value from falling too much and get emotionally affected, that may lead to unnecessary action (sell at depressed price) or inaction by ignoring what is happening (do nothing when crisis just started).
Through my first 2 months (in 2022) experience of enduring volatile market with inverse ETF, it did provide the hedging expected and reduce my anxiety during the falling market as the fall in value of portfolio is mitigated during the fall, of course the gain is also partly offset by the hedging when market is up. The objective of hedging during crisis is to mitigate the fear of major losses, which may result in smaller gain should the market stage a strong rebound too fast. But it served the purpose, reduce the anxiety and stress during volatile and sharp fall market. For that, I am positive about the objectives of these financial products (inverse and leveraged ETFs) - hedging and leveraging seems to work well to address my concern.
I have now moved into the next learning subject, close the short position(inverse ETF) and build long position via long leveraged ETF into the portfolio in anticipation of market recovery as I believe in past statistics - bear market duration is usually shorter than bull market.
yes, this will not be the last crisis and we will see many more crisis if we live long enough.
If you are not happy with how you handled your investment in the past crisis, how would it be different to you this time or the future crisis when it happens? I believe in continuous improvement through continuous learning and in fact, I am excited this time :) .
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