Downside Protection on Pullback

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My target for the DOW was 32,000 and we are almost there.

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Seems kind of arbitrary tbh. Do you have a reason for this?

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With all the stimulus Biden plans to do, I’m not expecting a pullback. Quite the opposite.

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You don't think this is baked in already? Stock markets are forward looking.

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Seems kind of arbitrary tbh. Do you have a reason for this?

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It is kinda arbitrary. Just looked at some historical DOW trends and had that as my target number to start pairing down, locking in gains, and waiting for a pullback to reinvest. Nothing political. I don't think Biden will be as bad for the market as some think.

You'll probably get downvoted to hell because most don't like to acknowledge potential downturns, but I think it's prudent to have a plan.

I think certain parts of the market are bubbly, especially in growth (most notably tech). Even the indices are being propped up by a few large companies.

I've never heard of TAIL. I know certain strategies of purchasing Puts to hedge, but I've personally never done it. I like the idea rather than just selling though.

Also, some knowledgeable people play the VIX, but I've only dabbled in that.

I'm interested to hear ideas from some of the smart folks around here.

ETA: I agree that current Fed policy will prop up markets at least for the short term, but I do expect to see some drastic moves to the downside this year.

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until then the markets have a safety net and are proceeding apace

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While you have a point, it’s worth acknowledging this same refrain was making the rounds in 2000, and in 1929 for that matter. The Fed seems hellbent on doing all they can to prevent a major downturn in risky asset markets, but it’s not the guarantee some perceive it to be (not saying you’re doing that here, just pointing out the Fed doesn’t give the markets immunity from experiencing a major correction).

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What makes this time the smart move?

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The market hit my run up target? The last four market run ups were 2012-2015 (40%), 2015-2018 (42%), 2018-2020 (25%), 2020-2021 (40%) on the DJIA. The pullbacks have averaged about 15%. I think that's easily doable at these levels. Possibly worse if we get some bad COVID news or lose Biden.

TAIL seems to be the less risky pullback bet.

“You can’t fight the fed.”

I’m selling puts on stocks I would by at lower prices.

I’m selling calls on stocks I would sell at that strike.

You can make money in any market. Just have to manage risk.

Perversely, big oil might benefit from the pipeline and drilling decisions.

Big insurance companies and banks may get a boost from a little higher interest rate.

I would not make rash decisions like going 100% cash based on politics.

Many corporations give to both sides and play ends against the middle.

I voted for Trump, but markets in the US will likely go though the same corrections and runs they have for the last 100 years.

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My target for the DOW was 32,000 and we are almost there. Other than some long term holdings I'm confident in, I'm pairing down and waiting for another buying opportunity.

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Similar outlook here. I'm expecting a pullback into the $3480 range for S&P in the next few weeks, before the S&P subsequently rallies to $4400+ by this time next year.

I took some YE profits and increased cash levels awaiting an entry point trigger for several targeted equities.

Those of us in the 60+ age group are likely forced to play it differently than younger investors that can spread market risk over a longer measurement period .... Just my dos centavo$ .....