We should assume stocks will trade up, especially since that’s what they always do. Nevertheless, we might see markets take a dive soon based off the exceptional violence of this decline. It should not be discounted the the $SMH have caved lower by 15% over the past two weeks. Because of this, rotation into staples has been aggressive, with stocks like $KMB and $GIS jimmying higher.
My position is a bit depressing for me, since I nailed the open but closed out my hedge too soon and then got caught with a 10% $TNA position into the final hour; and that tanked to fucking hell and beyond. I close down 147bps, much better than had I not hedge, having booked nearly $15k in day trading gains. To be careful, I paired by $TNA position against a tripled sized (15%) $SQQQ position. This doesn’t mean I am bearish and the intent on it is to simply reduce the beta of the overall portfolio.
For example, my quant lost 4.17% today in a 100% allocated portfolio amidst the most aggressive stocks. Because I reserved 20% cash in my trading and possessed some hedges into today I was able to “lose less”, which is great but only effective if I make the full gain on the coming bounce. In other words, as painful as it is and as scary as it might be, my job is to take the hits on the way lower and position for the rally that is destined to come. The only question is, when is this fucking thing gonna go?
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