Breaking the rules

[DanielBaeumler]

Following the Corona frenzy in the news, I’m surprised that the S&P lost just a little more than 10% since it’s all time high from 19-Feb. If I look at the activities my company (SAP) recently took and hearing from other friends how there business is slowing down in all areas, it appears that the likelihood of going into a reasonable downturn is much higher than coming back any soon.

Following thoughts are on my mind:

1) I’m still 40% invested in the ASX growth portfolio. Rather closing all positions now than waiting until more and more closing signals come in over the next days/weeks?

2) Despite the fact that high volatility times are typically good times for a MOC system, I followed Nick’s approach and de-levered my MOC system from 4x to 1x. The question is though: Based on which market indicator/situation should I go back to 2x or even 4x?

3) May be it’s a good point in time to think about buying a short ETF on S&P 500?

Any thoughts?

[JulianCohen]

I have been thinking about point number two as well. I am keeping an eye on the VIX. Once it settles back down again from the very extensive swings it has made in the past week or so, then I will go back to leverage again.

What’s the definition of “settles back down again”?

Well there was nothing systematic in our changing of the leverage so I don’t think there is anything systematic about turning it back on again. However if you look at the VIX graph I think it is relatively easy to see when you might feel comfortable turning back on the leverage.

[ScottMcNab]

At times like I think it’s a relief to not to have to try and make a rational decision…so much conflicting info..one day the fatality rate much higher than 2% and the next its much lower than 2%…
Why not backtest impact on MOC with different position sizes based on index atr or HV or VIX? Develop a rule to reduce from 4x to 2x to 1x …and back up…then sorted for future events

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