# What to do if there is a major correction?



## barnz2k (8 June 2007)

Not asking if/where/how there will be a correction..
Simply asking what do you do when there is one?

Many people will guess and try to pull out 'before' it hits i guess. 
But once it really hits what do you guys do?

Hold on and wait/hope things return eventually
sell out, hold cash and wait for a pick up again?


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## Pommiegranite (8 June 2007)

it all depends on what your trading plan is.

Personally I look for undervalued advanced exploration stocks that have a likelyhood at mining at some point in the next 3-5 years AND plan on holding onto these until at least that stage.

They will be worth what they have in the ground, so 'corrections' are little more than 'market annoyances' to me, except that I could have possibly bought in at a cheaper level. 

At the end of the day, if I make 300% instead of 400%. I'm not gonna cry about it.


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## greggy (8 June 2007)

Pommiegranite said:


> it all depends on what your trading plan is.
> 
> Personally I look for undervalued advanced exploration stocks that have a likelyhood at mining at some point in the next 3-5 years AND plan on holding onto these until at least that stage.
> 
> ...




I agree with your general thrust with the exception being that I look not just for undervalued advanced exploration stocks, but also for overlooked exploration stocks generally that are cashed up.  This way they can survive the downturn and go onto prosper when the good times roll again.  
One comment though, its amazing how a thread like this is started when things start to sour a little.  IMO, don't panic and review your companies on a regular basis to ascertain whether or not they're worth holding.
DYOR


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## CanOz (8 June 2007)

barnz2k said:


> Not asking if/where/how there will be a correction..
> Simply asking what do you do when there is one?
> 
> Many people will guess and try to pull out 'before' it hits i guess.
> ...




My plan is to trade my plan. I'm going to look for more short opps over the next few days if this keeps up. I need to develop a scan for shorts.

I've closed out 5 losers in the week, my winners are going to have to get going soon.

Cheers,


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## dj_420 (8 June 2007)

good point pommigranite, 

i could sell be up for CGT try and better my exit price by 10% and then hope that my re-entry is back at bottom or i dont miss the bounce.

OR

i could just hold on to stocks that are doing very well have typically held up well during corrections periods, and use my 15% cash i now have to snare the last couple of bargains that i want.

my portfolio i have shifted to a long term view, one company that just started production JML, one company producing at years end GBG, another will be producing in next couple of months AED, one already producing PDN and a few great explorers to boot ERN, FNT and UMC.

i would like to add one more zinc producer to the list probably KZL, apart from that there should be some short to medium term bargains to pick up.


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## Kauri (8 June 2007)

If you are a technical trader, either mechanical or discretionary, your trading plan will have stops set that tell you when to exit...
  If you are a fundemental trader I assume the undervalued co's will be more undervalued and hence a better bargain, also there will be more opportunities popping up...
  If you buy on rumour and instinct I guess you sell on the same...
  If you buy and hold because the market only goes one way you've got some pretty expensive wallpaper.


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## CanOz (8 June 2007)

Kauri said:


> If you buy on rumour and instinct I guess you sell on the same...
> If you buy and hold because the market only goes one way you've got some pretty expensive wallpaper.




ROTFLMAO!


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## wayneL (8 June 2007)

barnz2k said:


> Simply asking what do you do when there is one?



Post bear cartoons?


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## BIG BWACULL (8 June 2007)

I,d RUN


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## wayneL (8 June 2007)

BIG BWACULL said:


> I,d RUN



But you can't hide.


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## stargazer (8 June 2007)

Hi 

First i would say only put in the amount of money you are comfortable with.  

As an example one trade went down 50% in about 2 months.  Was i worried NO.  Was i annoyed YES.  Did i get temptation to bail YES.  But i had made up my mind to stay Be it right or wrong.  

That company has now gone up 800%.  *So i guess don't bet more than you can afford to lose.*

You can sell just before the end of financial year and buy back and claim the loss.

Just grit your teeth

Cheers
SG


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## happytrader (8 June 2007)

Hopefully you've fattened up and can hibernate until theres signs of growth in the spring.

Cheers
Happytrader


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## petervan (8 June 2007)

Dump your spec stock, get busy doing something else and when the bloodbath is over get in on the bagains.I find the worst thing is to stare at the screen wishing you had sold.Still call this consolidation at the moment, not a major correction


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## wayneL (8 June 2007)

happytrader said:


> Hopefully you've fattened up and can hibernate until theres signs of growth in the spring.
> 
> Cheers
> Happytrader



No way, the bears are gearing up for a major party at some stage... might miss it if they hibernate.


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## barnz2k (8 June 2007)

basically I intended on long term holding for most of my stock.. SO i guess I hold through a correction as well.. Some that have been sittin on the fence for too long might be time to go and give something else a chance..

When people talk about a major correction (ie sell in may theorists, bearers etc) do they mean a long running down trend? At which if this happens why would anyone stay in?


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## CanOz (8 June 2007)

Don't know if anyone else noticed this today or not...but all my postions rallied into the close...well the majority anyway. I had the feeling there were still a few buyers about.

Cheers,


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## reece55 (8 June 2007)

CanOz said:


> Don't know if anyone else noticed this today or not...but all my postions rallied into the close...well the majority anyway. I had the feeling there were still a few buyers about.
> 
> Cheers,




CanAussie
Yeah, I agree there was buying today, but then there was buying yesterday and  all stocks flew further down today. To me, when the index is down 1.5% like it was today, it's time to close your market screen, sit on your hands and wait for the market to show you evidence of buyers coming back into the market (if you are a long player).

So far, the ASX 200 cash is down another 60 points to 6159 tonight as I type, so we could see further downward movement on Monday....

Cheers


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## nizar (8 June 2007)

barnz2k said:


> basically I intended on long term holding for most of my stock.. SO i guess I hold through a correction as well.. Some that have been sittin on the fence for too long might be time to go and give something else a chance..
> 
> When people talk about a major correction (ie sell in may theorists, bearers etc) do they mean a long running down trend? At which if this happens *why would anyone stay in?*




Because you dont know if a long running downtrend is there until it actuallys runs for a long time.... could just be a small correction.

Thats why i dont care what the market is doing, i just focus on my stocks. WMT went from .17 to .32 during the last correction.

Have your stops there. And just play it stock by stock in my opinion.

Im down by about 2% for the day  

Two stocks have triggered exits. One from initial stop the other a profit taking exit.

I reckon MAL, MAK and CVN are gonna run next week.


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## robandcoll (8 June 2007)

Ive only been investing on the ASX for 9 months and my portfolio went up today. Initially all research before venturing in. After 5 months tried a litltle day trading but the portfolio started to look wonky because I was buying and selling with the bull.  Since March back to research and real happy with what I have acheived. Everything is long term. I actually got the gitters this morning before going to work thinking everything was going to fall **** up and get home and most of mine are the green.


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## bean (8 June 2007)

Only one thing to do be out before it happens

from memory I read somewhere in you had bought General Electric a really strong US company just before the great crash and held it you would have got your money back
In 1957


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## nizar (9 June 2007)

bean said:


> Only one thing to do be out before it happens
> 
> from memory I read somewhere in you had bought General Electric a really strong US company just before the great crash and held it you would have got your money back
> In 1957




Yeh well the problem with that is the most verticle gains are made in the period before the crash.

If you can live with that, then thats cool.

But there were people calling an end to the bullmarket at every correction/pullback since the October 2005 correction.
If you were a professional fund manager, you cant afford to lag peers by that much by 2 consecutive quarters, let alone 1.5years+, just because you wanted to get out early.

People always focus on the negatives there were people who CLEANED up in the 1920s bull and in the 1986 run.

Lets try to be one of those.


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## Sean K (9 June 2007)

wayneL said:


> Post bear cartoons?



Ha ha!!!  Sensational. Where do you get those?!! Do you have bulls too? US bounced, or was it a dead cat?


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## Mofra (9 June 2007)

Wait until it bottoms out & then gear heavily into capital protected products


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## BIG BWACULL (9 June 2007)

One for the BULLS.
"There's a New Sheriff in Town. The Bull is Back."


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## BIG BWACULL (9 June 2007)

One for the BEARS.
"A Bear Market"


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## Trembling Hand (10 June 2007)

If you are a trader there is no way you would get into the market without knowing where you would get out if things go wrong. IF you haven’t done this first you are not in the business of trading you are kidding yourself. Every step should be....

Step.1 See plan 
Step.2 Act on it.


http://tremblinghandtrader.typepad.com/


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## wayneL (10 June 2007)

kennas said:


> Ha ha!!!  Sensational. Where do you get those?!! Do you have bulls too? US bounced, or was it a dead cat?




I save them as I see them  I've got some bull ones but saving those for later for when everyone is bearish. LOL

I reckon the dip buyers will have another go.


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## Wysiwyg (10 June 2007)

wayneL said:


> I save them as I see them  I've got some bull ones but saving those for later for when everyone is bearish. LOL
> 
> I reckon the dip buyers will have another go.




Not having experienced a long term declining market , apart from shorting stock I can`t see any other way to make a quid.Even then ,most stock aren`t shortable.What gives.
I don`t see the logic in wanting a declining market unless you short sell.Any enlightenment will be taken on board.


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## wayneL (11 June 2007)

Wysiwyg said:


> Not having experienced a long term declining market , apart from shorting stock I can`t see any other way to make a quid.Even then ,most stock aren`t shortable.What gives.
> I don`t see the logic in wanting a declining market unless you short sell.Any enlightenment will be taken on board.



If you want scrip to nail to the bottom drawer, you want to buy at value. In bull markets with stretched values, any purchase must be viewed as potentially temporary.

Only through a bear market will there eventually be purchases available ah-la Buffet value investing (broadly speaking). My bottom drawer is not nearly full enough and it will not be filled with overpriced crap.

Bear markets are cleansing and even out a host of financial and social excesses that occur in bull markets.

From a trading point of view, bear markets are far more volatile which is manna to the professional trader. A bear market will separate the wheat from the chaff in the trading stakes. the longer a bull market goes on, the more difficult will it be for bull market heroes to survive.

More on this later....


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## Wysiwyg (11 June 2007)

wayneL said:


> If you want scrip to nail to the bottom drawer, you want to buy at value. *In bull markets with stretched values, any purchase must be viewed as potentially temporary.*
> Only through a bear market will there eventually be purchases available ah-la Buffet value investing (broadly speaking). My bottom drawer is not nearly full enough and it will not be filled with overpriced crap.
> 
> Bear markets are cleansing and even out a host of financial and social excesses that occur in bull markets.
> ...




Thanks wayneL , 

I understand what you say but the bit that I highlighted is in my opinion a direct relation to demand for product or service.Therefore `term` is directly related.
For example if the price of uranium dropped tomorrow then so would the  u stocks.A temporary hold of stock in a product or service in demand will see one folding at the first decline.Even with this general view any individual stock can suffer the consequences of negative sentiment.

I think overall everything is in proportion.


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## purple (11 August 2007)

Mofra said:


> Wait until it bottoms out




you mean....back to where it all started? 


...................................................


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## numbercruncher (12 August 2007)

Selling a year to Early is better than selling a day to late


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