01 Mar Market Crashes are Nothing to Worry About
Market Crashes are Nothing to Worry About
Mar. 1, 2024
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Market crashes are fascinating.
And a complete non-issue.
Let’s take a look.
For one, a “market crash” is a very specific phenomenon for very specific traders. They only happen to people who buy-and-hold.
I lost $0 in the stock market in 2008. I also lost $0 dollars in the market in 2020.
I was a system trader at those times, not a buy-and-hold trader, so those events literally meant nothing.
System traders don’t go through crashes.
Losses, yes. Drawdowns, yes. Tough times, yes.
But Tulip Crashes?
No.
Dot-Com crashes?
No.
Zoom (ZM) crashes?
No.
A good system never crosses its fingers and rides a position down from the penthouse to the outhouse.
Nonetheless, social media is replete with articles breathlessly warning us about a crash.
And what, pray tell, am I supposed to do with your precious and prescient warning?
If I’m currently in a stock like NVDA, what am I supposed to do? Sell? It could go up for several more months.
If I’m currently not in a stock, what am I supposed to do? Not buy? Then when do I ever get in?
A crash warning is a nonsensical, mostly-inaccurate piece of twaddle, as Charlie Munger would say.
And, as we’ve talked about, a crash is 100% avoidable!
Let’s say we are in a hugely profitable position in NVDA right now. Here’s the Monthly chart:
According to the “Incredible System” we’ve discussed (watch videos on that here and here), we would hypothetically be in a NVDA trade with an entry back in March 2023 at $231.92.
With the stock now around $788, we’re sitting on quite a profit.
Yikes, is a crash coming???
Yes, a “crash” is probably coming. But guess what?
We have a stoploss.
When NVDA closes back below the SMA, we’ll get out. Barring the biggest gap down in stock market history, we are guaranteed to make a very large profit in NVDA using this system.
And we also get to stay in should the bubble last a while longer.
Bubbles are nothing to a system trader, just like crashes. Remember the QQQ during the Dot-Com nightmare?
We would’ve been out at $88 (it fell down to $19):
Zoom?
We would’ve been out at $321 instead of watching it fall from $588 to $58.
And it could’ve saved Isaac Newton from losing millions during the Tulip Bubble, too.
People love predicting crashes and trying to get clicks.
But system traders need not bat an eye.
They ain’t afraid of no crash.
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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.