Spencer Li

Market Crash: Is it Better to Sell Everything or Hold On? (For Your Long-Term Investment Portfolio)

market crash hold or sell

Recently in this stock market crash I have been getting this question a lot, and I think it applies not just to this market crash, but to all large market corrections in general.

So, is it better to sell everything in your investment portfolio, or to hold on till the market recovers?

In this video, I share my thought process on how I make my investment decisions for my long-term investment portfolio, and I offer you two important pieces of advice which you can use to strategize your own investment portfolio.

In deciding whether to cash out, you need to determine if you are using an active or passive investing strategy.

If your portfolio strategy is passive investing like dollar-cost averaging, or annual rebalancing of an all-weather portfolio, then whether the market is up or down should not have an impact on your strategy, and there is no reason to change your portfolio strategy and panic sell just because there is a market crash.

If your investing strategy is more active, such as value investing, or asset rotation, and you are good at it, then by all means follow your strategy of rotating your assets into safe haven products like cash or bonds.

The problem that most people face is that they do not have a portfolio strategy in the first place. And if this is the case, then should you hold on to what you have, or sell it in case it goes lower?

In the past 50 years, the market has only corrected 30% or more about 5 times, and only 50% or more about twice. So we need to think about this in terms of a trade-off between upside vs. downside potential.

If the market has already corrected 30%, and you did not manage to liquidate your portfolio earlier, at this very point in time, how much lower can it go? Another 20-30% more?

But if you sell off and it recovers to the previous highs before you can buy back in, the gains you will miss out are 40-50%.

So you need to decide if the downside risks you are avoiding is worth the potential gains that you could miss out on.

Another major consideration is whether you are currently adding to your portfolio (cash inflow), or drawing out from your portfolio (cash outflow). This will determine how aggressive your portfolio strategy is, and I will talk more about it in the video.

Enjoy the video, and remember to “like” and “subscribe”!

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Spencer Li

Best Trading Strategies for Fast Markets (News Trading, Market Crash, etc)

how to trade fast markets

Recently there have been a lot of large fast moves in the financial markets, due to the recent stock market crash, and this has also affected the forex markets, so I am going to share the 2 best trading strategies to tackle such situations.

Although they are quite rare in the stock market, such fast moves are actually quite common on the intraday market, and professional day traders who do news trading or intraday trading will be quite familiar with them.

When I was trading professionally, we would see such sharp moves a few times a week, be it a market crash or market spike.

For retail traders, the best trading strategy is to stay out, and wait for dust to settle before coming back into the market. The idea is to stick to your area of competency, if your trading strategy is not suitable for fast markets or news trading.

For those who want to try out fast trading in the stock market or forex market, there are 2 basic trading strategies:
1. Breakout trading + momentum trading
2. Fade extreme moves, like overbought or oversold conditions

The most important part of any strategy is to have a gameplan before you enter the market, or else you will part of be someone’s gameplan.

Your game plan should include your trading strategy, and specific points you will have your entry, stoploss, target, etc.

This way, once the market is open, you can just focus on execution instead of trying to strategize and execute at the same time.

This is especially important if the market is moving fast, or during a market crash, because there is no time to think, and very emotional, hence it would be impossible to make good trading decisions on the fly.

You will end up trying to chase every price movement, and you will always be one step behind those who have a solid game plan and a consistent trading strategy.

Enjoy the video, and remember to “like” and “subscribe”!

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Spencer Li

Why Day Trading Will Make You Less Money (And Bring You More Stress)

why day trading will make you less money

Most people think that in trading, the more trades you make, the money more you will end up making.

But is this really true?

Traders who adopt this philosophy will constantly be chasing the next big shiny object, reading every piece of news online, and hunting for new opportunities every day.

The danger with this approach is that you stretch yourself too thin, which leads to decision fatigue. Even when the low-hanging fruit and easy opportunities are right in front of you, you might be too busy out hunting to see and seize those trading opportunities.

The allure of excessive trading attracts new traders, who want to make as many trades as possible, and get rich quickly in a short period of time.

Thus they are attracted to day-trading, even though intraday trading is only suitable for the most experienced and advanced traders. Most new traders would be much better of doing swing trading or position trading, where they can hone their skills in a less fast-paced and risky environment.

The advantages of trading less are numerous:
– allows you to focus on the best trades and best strategies
– helps you avoid bad trades and excessive trading
– makes trading less stressful
– do not need to constantly monitor the market
– less transactions means less transaction costs

Hence, for those traders who are making too many trades, it would be good to check your past trading records, and see if trading less might actually improve your trading results.

Enjoy the video, and remember to “like” and “subscribe”!

 

complete guide to investing and trading psychology cover

If you would like to learn more about trading psychology, also check out: “The Complete Guide to Investing & Trading Psychology”

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Spencer Li

How to Profit from a Stock Market Crash (Panic Sell or Buy the Dip?)

profit from market crash

With many momentum-based trading algorithms in the market nowadays, corrections tend to be sharp and vicious, leaving many traders and investors shell-shocked and unprofitable.

As a market participant, what is your strategy when approaching such a market? What is the best way for you to take advantage of this opportunity?

Enjoy the video, and remember to “like” and “subscribe”!

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Spencer Li

Is Your Portfolio Anti-Fragile? (Does it Fare Well During a Market Crash?)

does your portfolio fare well in crisis

In a bull market, everyone is a genius because it does not take any skill to get great returns.

However, the real test of your portfolio is during a market crash or crisis. How will it fare if the stock market drops 50%?

If your portfolio is anti-fragile, it will actually benefit from such market volatility, and give you opportunities to buy assets on discount.

Enjoy the video, and remember to “like” and “subscribe”!

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