:HOW TO PROFIT FROM A MARKET CRASH: secrets to making money darling market crash:
:HOW TO PROFIT FROM A MARKET CRASH: secrets to making money darling market crash:
A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth. Crashes are driven by panic as much as by underlying economic factors. They often follow speculative stock market bubbles.
A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth. Crashes are driven by panic as much as by underlying economic factors. They often follow speculative stock market bubbles.
() The First Rule of Making Money During a Stock Market Crash. Buy shares of good businesses that generate real profits and attractive returns on equity, have low to moderate debt to equity ratios, that improve gross profit margins, have a shareholder-friendly management, and have at least some franchise value.
Tips:
What would be the best way to profit from the next stock market crash?
How can one profit from a market crash?
1. You can short equities
2, You can buy volatility
3. You can buy treasury bonds
4. You can buy gold
5. You can buy Japanese Yen and US Dollar
6. You can convert all your investments into cash
7. You can buy Put options on assets that will decline or Call options in those that will rise
The above are options available to all investors. To throw more color on each item:
1. Shorting equities is expensive since not only you would have to guess the direction right, but also the timing. And while you wait for stocks to decline you would have to pay borrow cost anywhere from 0% to high single digits (I saw a jaw-dropping 100% borrow cost once on banking stocks in early 2009). In addition, you would have to pay dividends out to those who purchase that stock from you while you are still holding a short position. Finally, if you are selling on margin, you will have a margin cost.
2. You can buy volatility, either by buying vol futures on CME, buying options straddles on equities or commodities or by buying your standard volatility ETF. These strategies are a bit technical and also quite costly due to high premium associated with buying not one but two options, or due to high rolling cost of volatility futures. A typical monthly cost to roll a vol future is about 5-7%, since vol futures, which are maturity-wise close to the spot tend to be in steep contango. If this sounds too technical, than please skip to the next option.
3. This is a tried and true way of weathering a market crush. Treasury bonds normally rally as they are considered "safe" investments. Furthermore, these days you can rely on Central Banks to provide further help by buying the same bonds you would already have. It normally helps to have an entity with the deepest pockets in the world to buy the same securities after you already own them.
4. Gold. Enough said. Just make sure you know when to sell.
5. Japanese and US currencies tend to appreciate in times of crisis as they are considered safe havens. This may change over time, but for now this is a reliable, probability-wise strategy.
6. Keeping your savings in Cash will let you sleep well at night if market is in turmoil all around you. You will do well to wait as in a few months you may have a chance to purchase the same securities at a fraction of a cost. That is if you can predict when and what to buy.
7. For items 1-6 you can execute the same investments via either calls or puts to take advantage of their inherent leverage and limited downside.
Good luck, and please be aware that this is NOT an investment advice.
Please Comment your personal advice 👇
Thank you
Tips:
What would be the best way to profit from the next stock market crash?
How can one profit from a market crash?
1. You can short equities
2, You can buy volatility
3. You can buy treasury bonds
4. You can buy gold
5. You can buy Japanese Yen and US Dollar
6. You can convert all your investments into cash
7. You can buy Put options on assets that will decline or Call options in those that will rise
The above are options available to all investors. To throw more color on each item:
1. Shorting equities is expensive since not only you would have to guess the direction right, but also the timing. And while you wait for stocks to decline you would have to pay borrow cost anywhere from 0% to high single digits (I saw a jaw-dropping 100% borrow cost once on banking stocks in early 2009). In addition, you would have to pay dividends out to those who purchase that stock from you while you are still holding a short position. Finally, if you are selling on margin, you will have a margin cost.
2. You can buy volatility, either by buying vol futures on CME, buying options straddles on equities or commodities or by buying your standard volatility ETF. These strategies are a bit technical and also quite costly due to high premium associated with buying not one but two options, or due to high rolling cost of volatility futures. A typical monthly cost to roll a vol future is about 5-7%, since vol futures, which are maturity-wise close to the spot tend to be in steep contango. If this sounds too technical, than please skip to the next option.
3. This is a tried and true way of weathering a market crush. Treasury bonds normally rally as they are considered "safe" investments. Furthermore, these days you can rely on Central Banks to provide further help by buying the same bonds you would already have. It normally helps to have an entity with the deepest pockets in the world to buy the same securities after you already own them.
4. Gold. Enough said. Just make sure you know when to sell.
5. Japanese and US currencies tend to appreciate in times of crisis as they are considered safe havens. This may change over time, but for now this is a reliable, probability-wise strategy.
6. Keeping your savings in Cash will let you sleep well at night if market is in turmoil all around you. You will do well to wait as in a few months you may have a chance to purchase the same securities at a fraction of a cost. That is if you can predict when and what to buy.
7. For items 1-6 you can execute the same investments via either calls or puts to take advantage of their inherent leverage and limited downside.
Good luck, and please be aware that this is NOT an investment advice.
Please Comment your personal advice 👇
Thank you
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