A Bear Filter – Stop Getting Killed Buying Puts via /r/wallstreetbets #stocks #wallstreetbets #investing

A Bear Filter – Stop Getting Killed Buying Puts

Over the last 9 months of raging bull market, we've seen dozens of separate variations on why the market is about to crash again. You may have been tempted by any one of them, only to lose your shirt on the next rally. Here are some filters to evaluate whether a bearish thesis has merit:

1. Technical Analysis. If it mentions any kind of technical analysis, discard it completely. The market never goes into bear territory on technicals. It just doesn't. Every pullback of 20% or more has a legitimate, fundamental reason that incites fear and caution. We may see small corrections that astrology TA can predict, but never an actual bear market.

2. Covid Concerns. Unexpected bad news of unknown and worrisome severity is what drives bear markets. As far as the market is concerned, this pandemic is over, so stop feeling bearish over it. We have 3 functioning vaccines and almost anything that happens won't be unexpected or unknown at this point. Sure, it could mutate to a new disease, explode through the winter, and continue to have a short term impact. But that possibility is mostly recognized and understood. What made the market crash at record pace last March was the fear of the unknown, not the actual impact at the time. The impact is worse now than it was then, but we know what is likely to happen and there's little (as far as stocks are concerned) to worry about.

3. Macroeconomic Doom. Yes, the stimulus cost and federal deficit are huge. Yes, the Fed's balance sheet is larger than it's ever been. Yes, inflation and unemployment are always concerns. But none of these is going to tank the market so don't let them bear down on you. The overall economic growth prospects for the next five to ten years are incredible and that's going to snuff out whatever concerns exist about deficits and QE. There is still tons of cash sitting on the sidelines and as economies stabilize, everyone will be pumping it into stocks.

TL;DR – Stop panic selling, buying puts, or waiting for a rug pull. We had it in March and if you missed it, hoping for another won't do you any good.

Positions: QQQ shares, QQQJ shares, XOM LEAPS, XLE shares, a bunch of lame index funds held since April.

Submitted November 24, 2020 at 10:41PM by Chief_tyu
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