I’m always buying the dip in U.S. stocks and BTC 😂, only to realize there’s no end to the damn dips. I bought in too quickly again this time. The risks clearly hadn’t been easing gradually, but I saw prices hitting new highs and, following historical patterns, started buying as soon as the index dipped a little.
My U.S. stock positions have stayed above 80% for years; even at the lowest, I’ve been at least half invested. This time my account is down by around ten points. U.S. stocks and crypto are pretty similar: my strategy is mainly based on holding stocks and coins.
After years of experience losing money, I’ve split buying the dip into four stages, so you’ll always have money left to buy more:
1. If it dips a little, fill up your spot position first, using cash-secured puts to get assigned.
2. If it drops further, add margin leverage, keeping total leverage below 1.5x.
3. When there’s a crash and people start crying, I’ll shift some of my position into long-dated options. Options don’t require much margin, so capital efficiency is generally over 10x.
4. If it drops further, swap the individual stocks for 2x leveraged stock ETFs (I haven’t reached this stage yet).
This strategy can still have a pretty big drawdown; normally, getting through steps 1–2 is enough. Being too aggressive comes at a price. In crypto, I got liquidated using low leverage during 10/11; with stocks, I added leverage to my account, and then, despite there not being much risk, I still got a margin call when the market fell...
My U.S. stock positions have stayed above 80% for years; even at the lowest, I’ve been at least half invested. This time my account is down by around ten points. U.S. stocks and crypto are pretty similar: my strategy is mainly based on holding stocks and coins.
After years of experience losing money, I’ve split buying the dip into four stages, so you’ll always have money left to buy more:
1. If it dips a little, fill up your spot position first, using cash-secured puts to get assigned.
2. If it drops further, add margin leverage, keeping total leverage below 1.5x.
3. When there’s a crash and people start crying, I’ll shift some of my position into long-dated options. Options don’t require much margin, so capital efficiency is generally over 10x.
4. If it drops further, swap the individual stocks for 2x leveraged stock ETFs (I haven’t reached this stage yet).
This strategy can still have a pretty big drawdown; normally, getting through steps 1–2 is enough. Being too aggressive comes at a price. In crypto, I got liquidated using low leverage during 10/11; with stocks, I added leverage to my account, and then, despite there not being much risk, I still got a margin call when the market fell...