Trading The Tides Or Let It Ride?

Does trading the Tides really make a difference? The answer depends on the volatility.

Say the market steadily rises 20% over a period of time. If, during that period of time there was only low volatility (VIX less than 20), then if you traded/timed the Tides perfectly, you may earn only a few percentage points greater than the 20% you would have earned if you had just let it ride. So during periods of low volatility, we are better off buying and holding (sailing), never returning to port.

However, in periods of high volatility (VIX greater than 20), trading the Tides can produce significantly greater returns. Looking back over the period between June 15, 2020, and February 16, 2021 the S&P rose 33%. Because of the high volatility during that period, if you timed the Tides perfectly, you would have earned 76%.

Volatility is the key to trading the Tides. And if you don't want to put in the work or we are in a period of low volatility then it is best to let it ride (buy and hold) good quality, preferably dividend-paying boats (stocks) or ETFs.

Fair winds and following seas and buy low and sell high!

Trading Tide Levels (at the time  of the post):

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This is for informational purposes only and the information provided does not encompass all possible or probable outcomes. Nothing posted here is an indication of future results or is a guarantee or promise of future investment returns. Investing in stocks or bonds carries risks including losing your entire investment. Nothing is recommended, advocated, or endorsed including any third-party links, resources, or advertisements of any kind. Any investment decisions are recommended to be in conjunction with a Certified Financial Planner with a comprehensive and personal financial plan and all other components that make up your own financial situation.

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