The wheel seems falling off

What a coronavirus scare! Even Godzilla won't take any chance!!

The world seems ending and the wheel is falling apart fast! Scary right? I'm happy to see the likely final exhaustive capitulation with panicky selling today. Here is my note to my Family yesterday when S&P was shedding another 100 points off, truly a historical three 100-point down days within a week. 

It's gut wrenching to buy when the market seems falling apart but it is part of my plan to buy more into deeply oversold conditions. As I said before, the most scary time to buy is almost always the best time when looking back. As far as I can recall, each of those times before has turned out to be quite profitable at the end. I don't think it will be different this time. Of course, I may need to sit through some painful time to see further deterioration of my positions but as long as my position size is manageable, the initial paper loss means very little to me. I'm now positioning for new highs in the months ahead for S&P. This is a similar situation to the 2018 Christmas eve. When everyone is chasing lows (buying puts), I'm aiming highs now. That's the essence of contrary trading! I'm expecting to see a stunning turnaround soon, if not today!

 

Again, be very clear about the risk involved and the position size for each trade. Always assume the world will indeed end for the risk management sake although the world will never end in reality!!

 

By the way, I was switching some stocks funds to bond funds a couple of months ago in my 401K in anticipating this kind of moment. I think now it is the time to switch back to the stock funds gradually. I will be doing in batch, maybe 50% initially and 25% each later.

A 10+% correction within days has never happened before. So it is indeed historical. When people are aggressively dumping, I'm aggressively collecting. Just as simple as that!  When S&P was selling hard again early today with another 100 points, I was adding more long positions. Will a turnaround come next week? I certainly don't know for sure but I think it is a high probability given the historically worst panic in terms of speed. Recall what I wrote on the Christmas eve in 2018 when we went into a similar intensive scare and panic? World will not end! This is exactly the same thing I'm telling my Family now with many buying ideas shared. As I said, DON'T BE TOO DEPRESSED!!