How often, or do you ever get to 100% cash when the market starts to roll over?

OriginalQuestion: How often, or do you ever get to 100% cash when the market starts to roll over? Or do you just switch to short positions instead? (e.g. selling the previous leaders)

Well, I often go to a cash heavy position rather quickly when things get ugly. I quickly part ways with recent trades in order to have a more easy time to hold onto the longer term position trades (Position trades typically make up between 20 to 50% of my overall equity. However before things get ugly I oftentimes try to catch a climax move short sale in one or maybe two prior leaders. Other than that I rarely short the intial breaks off the highs but rather wait for shortable weak rallies into major resistance level after such breaks (A very good timing technique I adopted from Gil). Currently (Jan 2021) many big stocks are trapped in volatile topping formations ($MSFT $AMZN just to name two). Here I would short right away when I see weakness in the form of meaningful bearish price and volume clues. Being both long and short happens quite often in such an environment. I don’t see this as hedging in the classical sense but rather seizing opportunity in both directions when the market underlying direction is not clear yet.

In 2020 I had several weeks where I was in 100% cash waiting for proper setups. I actually was in cash for the majority of the crash. Typically I am in cash for a couple weeks each year as I wait for proper setups to emerge.

related Q&As:

How do you decide when to be fully invested and when to keep some cash?

How would you increase exposure coming from cash and managing a large portfolio?


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