How would you approach the 'Reckoning phase’ of a market collapse?

Question

How should investors manage their holdings during the so-called ‘Reckoning phase’ of the crash?

Answer 1

In the Reckoning phase, it is necessary to remain steadfast if one has confidence in his or her investments and comprehends the executed companies’ fundamentals. Rather than resort to fire sale, attempt to buy the dip if the funds are available, as this will be useful when the bull run kicks in.

Comments

If you feel the sotck market crash, that's a perfect time to sell, later buy everything back 3x cheaper. Never trust those advisers telling you to "not ever sell", because surely they will

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The phase that can yield your highest return is right on the tip of the euphoria phase. I love the advice to slowly build cash on high yield account when the euphoria might take over the market and offer you shares at unreasonable prices. If you avoid the crash with your safe position and enter when the fear it reigning, there is where you have an asymmetrical return for the risk incurred. The worst case scenario is already priced in so you stand to lose very little, however the companies will slowly recover and that’s when you can have multiples on your investment

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Yup, failed Phase 2 myself during 2022. I saw my balance going down in a 401K and moved money to a "safe haven" that still lost money just not as much I hoped. Later as things began to get better I stuck to it and missed out on the rise back. Meanwhile a friend I'd helped setup an account for didn't budge and came out better for it. I lost a pretty good chunk of money that's taken until now to nearly recover - lesson learned! Meanwhile in my personal stocks I saw the dip\crash starting when COVID hit and sold many things to cash, when the market began to recover I paid attention and bought back in to things I hoped would do well - most of them did. It wasn't piles of money but by % comparison I came out way ahead. I hope to not have to go through that again though!

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Hi Mark, I’d be interested to know what phase you think we’re in now.

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Well said, leverage is a powerful tool but for most retail investors it is far too risky.