Dead cat bounce?

Like a twisted Pascal's wager, I would rather believe in a dead cat bounce than not - and therefore I am not buying the bounce.

If it is indeed a dead cat bounce, it would means more room to fall in the coming months. If it is not a dead cat bounce, then I can congratulate myself for holding on tight to my stocks that have seen more than 20% plunges in the past couple of weeks.

WILL IT BE
LIKE THIS?



OR THIS?

Source: Investopedia
















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Sequel to my previous post...

When we see dark clouds in the distance and don't act, we are plain dumb.

When we are drenched, we wondered why we didn't act earlier. No one to blame. So what to do?

Believe.

Believe that the dark cloud will past eventually. For the younger generations, there's time on your side. It's the perfect opportunity now for you to observe and learn from any mistake.

Perhaps 10 years down the road, we will look back at what we have been through and laugh at ourselves (for our action / inaction). Yeah just like the older generations who have been through the GFC.



What doesn't kill us makes us stronger. So keep calm to thank yourself 10 years from now.




“Risk and time are opposite sides of the same coin, for if there were no tomorrow there would be no risk.  Time transforms risk, and the nature of risk is shaped by the time horizon: the future is the playing field.”
- Bernstein


--------
Portfolio as at 26/03/20: -17.7% 


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Comments

  1. Recalled two veterans during GFC kept thinking every re-bounce off the support/resistance was dead cat rebound; and finally realized the market was way too high to re-enter and better stayed in cash to be safer. :-)

    How to know it is not dead cat rebound? Any TA indicators?

    ReplyDelete
    Replies
    1. Generally dead cat bounce happens after a steep/long downtrend that doesn't look like the trend will change anytime soon.

      They mistook pull-backs in U-turned uptrend as dead cat bounces??

      Delete
    2. Spur has the model answer! lol

      Delete
  2. Rainbow girl,

    Crash got sound.


    Its like dating and marriage.

    How do we know this guy will turn out to be marriage material?

    Dating lor!

    Enjoy, say yes to next date.

    Don't like, say next time... Maybe... LOL!


    Even when we marry that guy, its never forver and ever, passive passive.

    Sometimes our eyes stuck with stamps.

    Sometimes he changed. (Or we changed)

    Sometimes we took each other for granted and never ACTIVELY maintain the marriage.


    What do we do?

    Eat panadols? Just as long he brings home the bacon we endure?

    Or do we cut-loss?


    ReplyDelete
    Replies
    1. Hi SMOL,

      That's a very cute analogy.

      Like what I wrote, if we can see dark clouds (bad signs) then better do something. Maybe sometimes don't need to sustain bad losses if we can 'siam' fast enough.


      As for eating panadol... Let's go back to fundamental analysis.

      Lol

      Delete
    2. Oh, the difference -
      We can't date 10 persons or marry more than 1 person at the same time. However, we can dabble in various investment instruments at the same time and even sub-invest.

      Many crashes got sound! Simultaneously!

      Delete
    3. Some people marry, divorce, marry, divorce, like changing clothes.

      Some buy-and-hold to the marriage come fire and brimestone; highwater and what not. They take their marriage vows seriously.


      Eh, I'm the manwhore around here. You don't want to be a slut, do you?

      Who ask you to date 10 men at the SAME time?

      Cannot change dates after a few weeks or months meh? If they turned out to be losers?

      Please don't let those who join dating websites feel dirty leh!

      Where got so accurate "1 date; 1 shot" sure catch marriage material partners one?

      Delete
  3. Recency bias & loss aversion prevents humans from taking risks now (or to take profits quickly). And that is good for survival of the species. But maybe not so good for long term investing.

    If you die die need the money within 3 years (some say 5 yrs), forget about investing it, let alone speculation.

    Otherwise when the broad market has dropped -30%, -35% or -40%, you can start putting small amounts of your spare cash to work.

    US markets have plenty of "ready made" indicators to estimate bottoms or at least near-bottoms e.g. bullish/bearish percentages, % above 150/200/250 moving averages, conference board leading indicators etc.

    For STI basically have to use more basic stuff like MAs or EMAs, volume, +ve divergences on MACD or RSI, breakouts above descending trendlines or major resistance levels, etc.

    For those who die-die cannot stand losses after investing, one "no brains method" will be simply wait for STI to go maybe 1% or 2% above 200 DMA or 250 DMA.

    The overall market will have moved +20% from the bottom & certain good stocks will have zoomed up +30%. But if you're investing for the next 5 or 10 years .... so what?? ;)

    ReplyDelete

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