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 t