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by zone411 2289 days ago
Do you have any research showing that waiting for VIX below 30 after it was high is a correct strategy? You can just test it in around 20 lines of Python or just in Excel. Or that buying in a situation like now is a bad idea? Did you run a historical backtest? Did you test the trend following and the 200-day SMA? Please share. Of course, to show that any of them are promising models, you need to do much more than just the backtests but they are first necessary steps.

If you haven't done this then you really shouldn't give authoritative-sounding advice here.

3 comments

In any case I am just trying to help people limit their downside by giving some simple advice. It's always better to make less money and yet be able to sleep well, then always fearing your portfolio goes to naught with some naive strategy. Not worth shortening your life by a few years with all that underlying anxiety just to make a potential 10-20% more. But definitely I would say this strategy would at least increase your upside and minimize your downside than a pure DCA, because it factors in the psychology of a bear market. Just trying to help here, I stand no gains, just don't like to see people losing their minds and sleep over losses that could have been avoided.
I don't test. I just trade with real money. VIX going below 30 just signifies the start of bear exhaustion. You don't go in now, it just means to prepare to go in. 200 SMA is usually used by technical traders to gauge when to start changing their strategies to trading an upward trend instead, which after awhile becomes self-reinforcing. It just experience here. You can plot the 200 SMA on the 2008-2009 graphs on your favourite stocks and you can see that usually that's a good time to buy in.
You should really check your tone as well. This is good advice.
And you know this because?