Learnings from Recent Market Meltdown – Debt Ceiling Bull Crap

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Since I have suffered some decent damage (almost all July gains disappeared in past two weeks), I decided to jot down some things that I learned in the process of getting f’ed.

1. Market Weakness usually starts slowly, need to focus on the leaders. When leaders start moving, you know its time.
2. Never buy dips in the first few days of weakness. Pretty much guaranteed to get better deals few days later.
3. Wait till market starts panicking for real, bounces usually do not start until before real panic sets in
4. Always sell some into the strength. Never hurts to lock in some gains. You can always add back later, its even better to buy at higher prices
5. When there is a big event going on, no need to play with fire. Big boys don’t do that either, they will create an opportunity AFTER the event. That is ALWAYS true, just always!!
6. Averaging down is not a good thing to do all the time. If you think a price point is good, try setting buy orders 5-10% cheaper than that. It helps
7. When weakness prevails, always cut your dogs fast even if you are in red. Selling good stocks to lock in gains while keeping dogs in red in hopes of recovery, is just terribly bad. Because dogs drop faster and rise slow. Good stocks will rise back faster.
8. Get into the habit of removing some cash every month from the portfolio on a regular basis and put into very low risk assets.

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