# Systems and Strategies for the 2009 Recovery



## Rusty99 (11 January 2009)

Many people are predicting a stock market recovery in 2009, perhaps with volaility and false starts. Traders will need systems and strategies that will work during this wobbly recovery phase, as there is great potential for making a lot of money. It is likely that new or modified systems will be required, rather than the usual sets that worked last year and in the past. I think it would be worthwhile opening a thread that discusses and suggests what systems and strategies are likely to the the most effective in the current conditions and over the next few months when the market may recover. Otherwise we'll all be waiting and starving until 2010 to dust off the old tools that work in more stable markets.

Cheers


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## wayneL (11 January 2009)

1/ Don't take a recovery for granted.

2/ Don't rely on long only systems.

3/ Go delta neutral with part of your capital (after a suitable nuclear incident inside you brain-case learning about options)


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## Cartman (11 January 2009)

wayneL said:


> 1/ Don't take a recovery for granted.
> 
> 2/ Don't rely on long only systems.
> 
> 3/ Go delta neutral with part of your capital (after a suitable nuclear incident inside you brain-case learning about options)





1)  yep

2) yep

3)  i'll get back to ya on that one ---- my brain has been MIA for  cupla years lol 


1) and 2) both suggest it might be a good time for punters to brush up on trading Index  and/or Forex strategies ---- 

Rusty ---- check yr Priv. Message  box.


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## lesm (11 January 2009)

wayneL said:


> 1/ Don't take a recovery for granted.
> 
> 2/ Don't rely on long only systems.
> 
> 3/ Go delta neutral with part of your capital (after a suitable nuclear incident inside you brain-case learning about options)




4/ Adaptability to market conditions - systems/strategies, which are more appropriate for ranging, choppy or volatile conditions.


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## sinner (11 January 2009)

Reduce debt exposure to 0, instigate an extremely conservative savings plan.

Buy dollars and yen on dollars and yen weakness.

Sell dollars and yen on dollars and yen strength.

Use profits to buy physical gold which should be weaker during dollar strength.

Rinse, repeat.


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## Nick Radge (11 January 2009)

Rusty99,
I wrote a Special Report for subscribers back in March 2007 suggesting that the next 8 - 10 years would see a significant transitional period where Buy & Hold and Trend Following would underperform, yet Swing Trading and Buy/Write strategies would outperform. 

Personally I am 100% swing trading with a time horizon out to 4 weeks, both ASX and US, although the main focus being US..

I also agree that in these extremely volatile times that a degree of day trading may be a good choice assuming one has the time and inclination to do that - which I don't. However, I also see any new reliance on day trading as a significant survivorship bias risk.

Just my 2c

Nick

NB: You can download that report *HERE*


_This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision._


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## wayneL (11 January 2009)

sinner said:


> Reduce debt exposure to 0, instigate an extremely conservative savings plan.




This will not endear you to the Keynesians. 

May even be a criminal offense soon. :


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## sinner (11 January 2009)

wayneL said:


> This will not endear you to the Keynesians.
> 
> May even be a criminal offense soon. :




This is actually a major concern for me. 

Governments all over the world have a good track record of forcing defaults, creating wealth tax, etc.

As long as the paper money system holds up I am happy to try and game it and convert the profits to real assets. In order of expense physical gold and physical cash then silver but it is pretty cheap and easy to convert a portion of your capital to bottles of vodka and cartons of cigarettes in case for the worst!


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## Wysiwyg (11 January 2009)

sinner said:


> As long as the paper money system holds up I am happy to try and game it and convert the profits to real assets. In order of expense physical gold and physical cash then silver but it is pretty cheap and easy to convert a portion of your capital to bottles of vodka and cartons of cigarettes in case for the worst!




Lol, and your precious gold asset was worth how much a short number of years ago?Presuming you are young you may see current prices again in your life time.


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## sinner (11 January 2009)

Wysiwyg said:


> Lol, and your precious gold asset was worth how much a short number of years ago?Presuming you are young you may see current prices again in your life time.




I'm sorry Wysiwyg, not sure I understand what you are getting at?

I am young and gold was trading at a "high" of 600USD when I got interested in it! 

There is no assumption in my mind that gold will always go up, in fact I think we are approaching (rapidly) the next cyclical high for gold. The cue will of course be a 1:1 or near ratio of dow:gold. 

I am not looking to get rich, or even to be up when everyone is down. Otherwise I would just short the SP500. My only goal is to preserve the capital which I worked my butt off for in spite of currency debasement, core inflation, etc.

Will happily trade all asset classes for a nice big block of land outside the smog when the ratios are right.


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## Wysiwyg (11 January 2009)

sinner said:


> I'm sorry Wysiwyg, not sure I understand what you are getting at?
> 
> --------
> I am happy to try and game it and convert the profits to real assets. In order of expense physical gold and physical cash then silver




Well you typed that gold is a real asset and I`m saying historically gold has been a depreciating asset over lengthy periods following the highs.

An ounce bought in 1987 would have taken about 17/18 years (not considering inflation ) before returning to the original bought price.


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## sinner (11 January 2009)

Wysiwyg said:


> Well you typed that gold is a real asset and I`m saying historically gold has been a depreciating asset over lengthy periods following the highs.
> 
> An ounce bought in 1987 would have taken about 17/18 years (not considering inflation ) before returning to the original bought price.




Hi again Wysiwyg, thanks for the clarification. I think you are unfortunately taking a pretty narrow view, despite claiming it to be historic. Gold is not a depreciating asset, it is a *cyclical* asset. Usually through no fault of its own, but rather through the actions of Government. 

As with all asset classes, one must do their own research before investing. If you do this and feel that gold is neither capable of retaining its purchasing power or simply at a bad cyclical entry point, then do not invest in it!

For the cost of an ounce of gold in 1987 you could have just as easily bought 2.1 Dow (or 1 dow in 1979), anyone who had done their research at the time could have seen this plain as day.

I have attached a long term chart to make the point eminently clear just how incorrect the view of "always long 1987 gold" is.







Now, since you have made me feel awfully like I am hijacking the thread a bit, I will post a supporting link to Nick Radges timely 2007 view Warren-Buffet-buy-and-hold is dead for now, time to trade!

http://www.cnbc.com/id/27994326/



> "The Warren Buffett approach is dead and it's been dead for ten years and it's going to be dead for another ten years," Faber said Monday.
> 
> "We've moved into an environment of very high volatility where you will have up and down moves of like 20 percent all the time and that is a traders' market," Faber said.
> 
> ...


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## theasxgorilla (11 January 2009)

wayneL said:


> 3/ Go delta neutral with part of your capital (after a suitable nuclear incident inside you brain-case learning about options)




Please excuse my ignorance, does _delta-neutral_ refer to strategies like the one you used when writing the put option on the Jan SPY contract at the other thread?


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