Guidance required for the upcoming downturn

[cristiano7subo]

Hi Sol and senior astute investors!
I believe this is a question in the minds of some more fellow investors who can't afford a huge capital at this point in their career. To explain in detail, I'm in my late 20s and I live in the middle east where my income is pretty low compared to the US. From what I earn, somehow I'm currently allotting 60% to my investments living a meagre lifestyle and that savings is roughly 12-14k dollars a year. Considering that, I'm now wondering if the 'sell cash secured Puts' strategy would work out for me, because I'm afraid then that a big chunk of my investment would be directed to a single stock (like 100 shares of a stock for a single contract?). At the moment, my entire portfolio is based on TI recommendations with my investments equally deployed in lots. Only exception is that I have about 20% of my total investment in TQQQ. I'm staying away from options at the moment because I think I'll not be able to roll in the capital to purchase 100 shares of any stock (currently I'm invested in 30 plays and the shares I own in each stock is in single digits).
What would you suggest as my best strategy to recoup some of the losses, when the upcoming drop starts? Would you suggest rotating my TQQQ shares to SQQQ? (I would classify myself as a medium risk taker, and I was able to remain calm when my entire portfolio reached seriously low levels like 40% red)

[Yodean]

*****

dunno if this really helps ... btfd! slowly, lol ... retail herd is starting to short the equity markets, trying to make their $$$ back ... smart money is accumulating assets, often between 1445 and 1525 EST ... IPOs are also a good sentiment indicator ...

stocks to the moon! until they fall back down.

nfa.

[bpcw]

I think there is place for shorting but you have to be aware of the risks with ETFs, especially geared one's. SQQQ is a 3 x Nasdaq short. When you have extreme volatility they can work against you.

For example with SQQQ, if the Nasdaq went up 10% one day and 10% down the next day you wouldn't be at break even but for a $1000 initial investment you would have $910 left. If volatility persists for a while this will eat into your investment big time, they work well when trending in a smooth fashion but not under high volatility, and this is because they are recalculated on a daily basis.

Perhaps you know this but wanted to warn you in case.

If shorting I think we have to wait for extreme bullish sentiment and the FOMO factor being in full swing. Otherwise we need a lot of patience to wait for the stock markets to roar back into it's next bullish phase that will see many stocks go up by multiples.

[bpcw]

Also to add, I have a friend who during the covid crash had a lot of money in JNUG which was a 3 x gold junior miners ETF, the junior minors went down around 60%, but regained all of it back and at it's peak was 40% up but the JNUG ETF was worthless, he lost the lot.

[bpcw]

And one amendment to my first example:

If for example the Nasdaq went up from 10,000 to 11,000 (10%) and then the next day dropped back to 10,000 ( 9.09%) you would actually be left with $890 by my calculation.