Predicting If & When the Stock Market Hits Bottom

If that wasn’t the bottom, then what will happen is there’s a bit of a rally. I’ve started to buy stocks to make money on the way up, but I’m not fully invested yet because my systems enter gradually, as it proves. I’ve got a bit more long-side exposure, but if it turns around and falls, I also have some short-side exposure. For those who don’t know what the long side and a short side mean, the long side is when you buy something hoping it will go up in price so that you can sell it later at a higher price and make a profit. The short side is where you borrow a stock from a broker and sell it first. Thus, you sell it at $100 a share, and if the market falls and you buy it back at $50 and give it back to your broker, you make the $50. Therefore, when it goes up, you make money, it’s the long side. On the short side, when it goes down, you make money.

Hence, if that wasn’t the bottom, and it’s just a rally, and it’s going to collapse, my short side will continue to make money. However, I don’t mind whether that was the bottom or not, and that’s how you want to be. You want to be agnostic to what’s going on in the market and be able to sleep well at night regardless of what happens. If you’re diversified across markets, strategies, and timeframes, and you have a systematic approach, then it’s very easy to sleep well at night and trade simultaneously.