DCA strategy during bear market

[zzTiny]

Tiagong they even have magic delta and dte for selling options leh. I no monies to play.

 

[RedsYWNA]

How do you know the options will be assigned? TS could end up with a 5% gain or something while the market end up +50% 3 years later.

TS asked for a way to unload his bullets, upon a 20% or further drop.

So i proposed 1 way for him. Of cos, i did state that this may not beat lump sum investing at the 20% drop level.

 

[d5dude]

No what. I thought it depends on the strike price and dte? I never see people sell options, dte until 3 years later leh. I only see people do leap if more than few months.

He was talking about selling monthly put options. An example is you sell monthly puts, the market goes down hard but your puts dun expire in the money so you are not assigned, you make a few % depending on vol and strike price. Meanwhile market bottoms and go on to move up 50% 3 years later. See the difference between short term trading and long term portfolio allocation now?

 

[d5dude]

TS asked for a way to unload his bullets, upon a 20% or further drop.

So i proposed 1 way for him. Of cos, i did state that this may not beat lump sum investing at the 20% drop level.

Yes but trading options is not a way to unload his bullets because there is no way of knowing if he will be assigned. Read my example in the post above.

 

[0218crawford]

He was talking about selling monthly put options. An example is you sell monthly puts, the market goes down hard but your puts dun expire in the money so you are not assigned, you make a few % depending on vol and strike price. Meanwhile market bottoms and go on to move up 50% 3 years later. See the difference between short term trading and long term portfolio allocation now?

have u sold any puts before? market goes down hard and yet you still don't get assigned? your strike must be placed at a level where the sun does not shine. 1 delta put?

 

[d5dude]

have u sold any puts before? market goes down hard and yet you still don't get assigned? your strike must be placed at a level where the sun does not shine. 1 delta put?

It depends, for example if the option is 30 days to expiry the odds of it being exercised is close to nil even if its ITM, especially if theta is very high and the option has a lot of extrinsic (time) value in it.

My point was that this is option trading, doesnt have much to do with allocating capital for long term investment.

 

[churnmaster]

TS asked for a way to unload his bullets, upon a 20% or further drop.

So i proposed 1 way for him. Of cos, i did state that this may not beat lump sum investing at the 20% drop level.

I was right when I used the term "controversial" in my earlier comment. LOL

At 4700, when I said sell 4300 put ..... some said what if it doesn't get assigned. Now we are sub 4000 and still the FOMO crowd has the same fear.

They think we are going straight to the moon whereas some of us believe we have to hit the ground first before going to the moon.

 

[d5dude]

I was right when I used the term "controversial" in my earlier comment. LOL

At 4700, when I said sell 4300 put ..... some said what if it doesn't get assigned. Now we are sub 4000 and still the FOMO crowd has the same fear.

They think we are going straight to the moon whereas some of us believe we have to hit the ground first before going to the moon.

You so smart, so pro, but what is your 10 yr return?

Btw you should be buying puts, not selling them if you were so cock sure that the market was going down.

 

[BBCWatcher]

If you're trying to time markets then just be aware that the U.S. S&P 500 index is expressed in U.S. dollars. The SGD-USD exchange rate moves, too. Lately (recent days at least) the SGD has been generally weakening relative to the USD, meaning that a decline in the U.S. S&P 500 index is attenuated in Singapore dollar terms. If you're a Singapore-based speculator then presumably you're trying to catch the lowest price in Singapore dollar terms of whatever you're chasing. That's even more difficult. And if you're using options you'd actually need even more complex combinations of currency and stock index options. And I'm leaving aside dividend yield factors. (The S&P 500 stocks throw off dividends, and the dividend yield is somewhat higher than what you can get on cash. Meaning time out of the market involves some net dividend loss.)

....Or you could just (Singapore) dollar cost average and (as Shiny puts it) "go to the pub."

 

[jayou8]

If you're trying to time markets then just be aware that the U.S. S&P 500 index is expressed in U.S. dollars. The SGD-USD exchange rate moves, too. Lately (recent days at least) the SGD has been generally weakening relative to the USD, meaning that a decline in the U.S. S&P 500 index is attenuated in Singapore dollar terms. If you're a Singapore-based speculator then presumably you're trying to catch the lowest price in Singapore dollar terms of whatever you're chasing. That's even more difficult. And if you're using options you'd actually need even more complex combinations of currency and stock index options. And I'm leaving aside dividend yield factors. (The S&P 500 stocks throw off dividends, and the dividend yield is somewhat higher than what you can get on cash. Meaning time out of the market involves some net dividend loss.)

....Or you could just (Singapore) dollar cost average and (as Shiny puts it) "go to the pub."

When I sell my US holdings, must I DCA selling to minimize the risk of fx? ( Singapore resident here )

 

[BBCWatcher]

When I sell my US holdings, must I DCA selling to minimize the risk of fx? ( Singapore resident here )

Well you're not holding either U.S. or Singapore dollars when you're holding stocks. You're holding stocks.

Typically you'd sell increments of your accumulated stock/bond wealth to fund a retirement lifestyle. You might do that every quarter, for example. Let's suppose that's S$15,000 per quarter (S$60,000 per year) in Year 1 of retirement. Then you could adjust that S$15,000 annually to account for inflation. I'm assuming the S$15,000 per quarter (plus inflation) is within a Safe Withdrawal Rate (SWR) so that your savings will last at least as long as you do (your lifespan) — or your joint lifespan if there's a spouse/partner in the picture.

There are lots of interesting variations on how you might periodically sell assets to fund your retirement, but I'm illustrating one possible, reasonable way.

 

[Cupid Stunt]

If you're trying to time markets then just be aware that the U.S. S&P 500 index is expressed in U.S. dollars. The SGD-USD exchange rate moves, too. Lately (recent days at least) the SGD has been generally weakening relative to the USD, meaning that a decline in the U.S. S&P 500 index is attenuated in Singapore dollar terms. If you're a Singapore-based speculator then presumably you're trying to catch the lowest price in Singapore dollar terms of whatever you're chasing. That's even more difficult. And if you're using options you'd actually need even more complex combinations of currency and stock index options. And I'm leaving aside dividend yield factors. (The S&P 500 stocks throw off dividends, and the dividend yield is somewhat higher than what you can get on cash. Meaning time out of the market involves some net dividend loss.)

....Or you could just (Singapore) dollar cost average and (as Shiny puts it) "go to the pub."

Err I don't see why that matters. You are exposed to FX risk whether you lump sum now, DCA or wait for value. If you want to average out the FX risk you can always DCA your FX conversion without buying stock.

Timing the FX market has nothing to do with value investing in stocks though. I think people here are happy to put in a little extra effort to get much more out of their investments rather than just go to the pub and heck care.

 

[RedsYWNA]

Err I don't see why that matters. You are exposed to FX risk whether you lump sum now, DCA or wait for value. If you want to average out the FX risk you can always DCA your FX conversion without buying stock.

Timing the FX market has nothing to do with value investing in stocks though. I think people here are happy to put in a little extra effort to get much more out of their investments rather than just go to the pub and heck care.

https://nlb.overdrive.com/media/8460175Risk Parity
How to Invest for All Market Environments

This is an excellent book that tries to make sense of the various different environments we are exposed to. For market timers, these theories are first made popular by Ray Dalio.

As mentioned above, I assume those who follow the thread " are happy to put in a little extra effort to get much more out of their investments rather than just go to the pub and heck care"

 

[BBCWatcher]

Err I don't see why that matters.

Uh...

You are exposed to FX risk whether you lump sum now, DCA or wait for value. If you want to average out the FX risk you can always DCA your FX conversion without buying stock.

...That's why it matters. Market timing involves, well, markets timing. Because (presumably) you're Singapore-based, and your "real" currency is Singapore dollars. More precisely, your real lifestyle is purchased primarily in current and future Singapore dollars.

Yes, hypothetically you could time one market (stocks) and dollar cost average another (U.S. dollars). Except, not really. Because how do you have enough U.S. dollars to leap into the U.S. dollar priced/quoted/listed market you're timing unless you already have U.S. dollars? You don't. As a practical matter you have to time both markets (forex, stocks) or neither.

Timing the FX market has nothing to do with value investing in stocks though.

Oh but it surely does if you're a Singapore-based speculator.

I think people here are happy to put in a little extra effort to get much more out of their investments rather than just go to the pub and heck care.

If that were possible! The great Warren Buffett puts in a LOT more effort to get (maybe, if you squint, depending on how you measure) a LITTLE more out of his investments. There really is no serious controversy here about how well speculators do even in 90th percentile terms. And as I've just illustrated you have to be both a foreign currency and stock timer to do well from a Singapore vantage point. So it's even tougher for you than it is for Warren Buffett. Good luck!

 

[Cupid Stunt]

Thanks for the well wishes. All the value investors here are thankful for that. But I hope you guys will be more appreciative and respectful for our methods though rather than hold the holier than thou dismissive attitude.

 

[churnmaster]

If you're trying to time markets then just be aware that the U.S. S&P 500 index is expressed in U.S. dollars. The SGD-USD exchange rate moves, too. Lately (recent days at least) the SGD has been generally weakening relative to the USD, meaning that a decline in the U.S. S&P 500 index is attenuated in Singapore dollar terms. If you're a Singapore-based speculator then presumably you're trying to catch the lowest price in Singapore dollar terms of whatever you're chasing. That's even more difficult. And if you're using options you'd actually need even more complex combinations of currency and stock index options. And I'm leaving aside dividend yield factors. (The S&P 500 stocks throw off dividends, and the dividend yield is somewhat higher than what you can get on cash. Meaning time out of the market involves some net dividend loss.)

....Or you could just (Singapore) dollar cost average and (as Shiny puts it) "go to the pub."

You are right regarding the FX risk. In my case, I just keep the excess cash in USD with the intention to reinvest in USD denominated assets, however at some point in time I intend to convert part of this into SGD, especially when FED restarts the printing press.

In the near term, while the USD has appreciated against most other currencies including the SGD, longer term I expect SGD to appreciate vs USD.

Just to bring in a different perspective - last time USD Index hovered around 103+ was in Mar 2020 when USD/SGD was 1.46 and this time it is 1.39. SGD has been appreciating against most other currencies and I guess this trend will continue in the near future. That's precisely why I avoid something like IWDA, EIMI and prefer to stick with S&P 500.

 

[reddevil0728]

Thanks for the well wishes. All the value investors here are thankful for that. But I hope you guys will be more appreciative and respectful for our methods though rather than hold the holier than thou dismissive attitude.

actually is about whether you are doing value investing or random investing

 

[Cupid Stunt]

actually is about whether you are doing value investing or random investing

Dude you really got to quit your hate boner for other investing methods that doesn't agree with your DCA style. Many people here have already gave their criteria and basis for buying in and yet you refuse to accept them and insist they are random investing.

Are you really that insecure about how you invest?

 

[reddevil0728]

Dude you really got to quit your hate boner for other investing methods that doesn't agree with your DCA style. Many people here have already gave their criteria and basis for buying in and yet you refuse to accept them and insist they are random investing.

Are you really that insecure about how you invest?

I don't know how you read that as hate boner.

I was simply just saying, some people target a price based on some random number and without basis. Those aren't value investing, those are just random.

 

[Cupid Stunt]

I don't know how you read that as hate boner.

I was simply just saying, some people target a price based on some random number and without basis. Those aren't value investing, those are just random.

Everyone here has a good basis so I dunno who you are referring to.