BRexit #3: Bear and Bull Markets
This post is mainly from the TDT of 6/30. The first part deals with bull and bear markets—in relationship to the Brexit vote. Welcome. We’d like to share a brief commentary about the newsmakers and the news they make. It’s hard to believe it was just a week ago that the UK voted wisely to exit the EU. It’s also funny how a new word like “Brexit” takes over the discussion.
The market sold off over 800 points in the two days following. I made my comments in TRAIL. But starting Tuesday, the market has been moving back up. I could write a thesis on the length and depth of Bull and Bear Markets. Oh, I think I did way back when. Here in the prologue to today’s TDT I’ll start a brief discussion, and then in the member’s only body of the TDT I’ll give some trading ideas to capture some quick profits.
Before that, let me share a wise observation—similar to what I was saying in the previous Brexit commentary. Here it is in all of its unadorned wisdom: MARKETS FLUCTUATE. Yes, everyone is a genius in a bull-market, but remember, “this too shall end.”
We use volatility to our benefit. We constantly say to put market forces to work for you. Market Forces, in this regard, usually means time and volatility. This is the main reason I like covered calls so much. We don’t need a lot of volatility—or market crashes and recoveries—to make consistent money.
Here is a brief grouping of thoughts in reference to Bull and Bear Market. I don’t remember the exact times, as in months, but the gist of these comments is solid. Here goes: The average bear market lasts 9 to 11 months. The average bull market last 6 years. The Bears are louder than the Bulls and lurk everywhere.
An example. In 1987 we had a serious market sell-off. Some called it a crash. Here are some of the numbers I remember from that time. The market sold off by about 40%. People still use that event as a way of selling gold, and scaring people. So, if you had $100,000 in the market, it went down to $60,000. But did you know if you would have not panicked, and just held on, in 13 months from the crash, your account would be back up to $120,000. Actually I think it was a little higher.
This is important. But don’t miss the other side of the coin. What if you would have gotten into stocks at the bottom, or $60,000 level? Wow, and double Wow. This is what I commented on last week on my blog and on TRAIL. This BREXIT would provide a lot of opportunities. It sure has.
So, let ‘s get to today’s TDT deals, and continue this commentary into some trades.
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