Stocks down. Next moves and why I sold Crypto
This is after selling 50 of my leveraged etfs right before the crash ive been busy putting my volatility management strategies in full force. Lets talk, hey friends, welcome to think finance and thanks for tuning in its been pretty rough out there, i have lost more hair in january than my entire life combined. Actually thats, not true. I lost more during the covet crash now you wont like this, but i love it. I love it because all this means is some crazy opportunities in our favorite stocks. In this video, i will quickly summarize the fed move, what it means for us and how i am managing this insane correction in the stock market and crypto. First, the basics with inflation running hot and labor market approaching maximum employment. I think it is fair to assume fed, will tighten rates at each meeting and will continue shrinking the balance sheet. The plan is to reduce liquidity or amount of money in the market and make borrowing expensive. This will reduce the overall demand, slow the economy and put a check on inflation economics 101. For us, this means easy money is over, at least in the short term. 2022 is going to be a headline driven market inflation rates, tapering, hawkish, dovish and everything in between. If youre in the market for a house, mortgage rates will go up as the 10 year bond yield goes up. This may not help our pocket much but may help the housing market.
Overall, as the mortgage rates go up, monthly payment on a house will be higher, making it more expensive demand may stabilize. But then again, inventory is a problem which will keep the market competitive if youre a saver and believe in locking money in the bank and are expecting the rise in interest rates to drastically increase the interest bank pays you on your cash. Well, good luck, thats not happening by the way. You know that right cash is trash and savers are losers, meaning losing money by not investing get invested if youre a borrower. We just talked about mortgage rates. Maybe you carry a balance on credit card or you want to draw a personal loan rates will be up. This is the whole idea, with rate hikes, make borrowing expensive. If you are a stock market investor, behold volatility is going to be at its finest. We have already seen one of the worst januaries on record and stocks whipsawing like crazy on a daily basis. This will continue, at least in the short term, check these videos out. If you need more on stocks in 2022, inflation and interest rate impact on our money, i already did a video where i talk about changes i made to my portfolio in the last six months, given we are starting to hear rate hike talks, i sold 50 of My leverage etfs got out of anything hyper growth and now focusing only on quality profit making companies, but then we saw this massive correction in tech, so i did a few more things basically applied some of the strategies i use when markets go south.
At one point, tech was down almost 20 percent; it never hit bear market territory, but got close stocks like apple microsoft, nvidia and bunch of other tech and semis hit oversold conditions. What was the last time we saw rsi for microsoft, apple and nvidia at or below 30., even during the covert hit, microsoft never breached 30 on rsi. This was a rare gift. So here is what i did. My portfolio is a mix of leverage, etfs and stocks lets start with stocks. I have this concept of core versus non core stocks, theyre all good stocks, but some i consider as all star, for example, consider the new york real estate market im, not a broker, but im guessing manhattan is the best new york has to offer. Then there are other neighborhoods that are also considered good, but is not manhattan. When market falls, everything falls when market recovers, everything will come back, but manhattan will recover the strongest since everyone wants to get the best at a discount similar concept. There are some stocks which i consider core or manhattan, and then there are other stocks which are good but are not manhattan. So when market falls, i want to double down on my core stocks because they are at a discount and will recover stronger compared to the other stocks to double down on names like microsoft, google, apple and nvidia, i needed cash and thats when i ended up selling My non core stocks, great stocks – they are just not manhattan, take a look at this video.
Where i talk about different strategies, i use to manage my portfolio in a volatile market. I own around 29 stocks and four leveraged etfs top 10 stocks make 62 of my stock allocation. They are my money makers covers tech, cloud, semis, metawars, staples home builders, consumer hardware, healthcare and a restaurant leaders in what they do moved money from non core into core. If you follow this channel, you know, i add, to leverage etfs every time. Nasdaq 100 falls 10, 20 and 30 percent. I got some t triple qs, so excel and tcl. When tech entered correction, i want to get some more, but well wait for either the market to fall further or we start seeing trend reversal. I do believe we will be in a much better shape a few months from now, and it makes sense to put money to work when stocks are at a discount lets talk crypto. Some of you wont like this, but i sold 95 percent of my crypto holdings. Im still a believer and bullish overall, just not in the short term for two reasons: number one i see crypto falling in this hyper growth or speculative asset class. I think the macro conditions are not suited for these kind of investments. I talked about this in length in my earlier video, so check that out number two. Given the drop in the stock market, i think there are better opportunities in the short term to get more out of your money versus hardline crypto, and i had a pretty significant chunk of money in crypto.
For these reasons, im out i sold bitcoin at 42k and ethereum at 3100. I will be back, but for now i see other opportunities where i can make more money. A big chunk of crypto money went into robin hood, almost 70 percent. I use robin hood to trade options. Quality companies dont stay at a discount for long. I ended up opening large positions in apple and microsoft calls right when they dropped big. Then earnings came out and boom both exploded to manage the time decay and volatility crush. I bought deep in the money options expiring 180 days out. It worked longer dated options and leaps is something im experimenting with. Let me know in the comments if you would like to see a video on this topic, some point in the future. Given the macro conditions, we will continue to get lots of opportunities to make some decent money with options, and once the noise settles, i will go back to crypto and re establish my position into btc and eth. The good thing about options is you dont need a lot of money to make big money. I took the remaining thirty percent and dropped into my sons. 529 plan tech is down big good time to fund taxed advantage accounts like 529 plans and roth accounts in 529. Im, investing in vanguard growth index fund great time to load it up, so yeah ive been busy navigating the storm. I try to post moves.
I make on stock tweets and twitter. Follow me if you care also theres a link in the description to my long term.