I know that Bill is good at getting the direction right, I do not know his track record for being right on magnitude (not saying good or bad, I'm saying I don't know).
Here is the list of what he says to do (I used fewer words);
- Buy index puts on up days
- Sell popular stocks with high RSI and relatively high p/e ratios
- Sell stocks with visibility for bad earnings
- Scale back core holdings on up moves
- Don't write puts unless you really want to own the stock
- Avoid emerging markets now, be ready to buy soon
- Increase precious metals exposure on pull backs
- Buy junior mining stocks that meet very specific criteria
- Buy high yield bonds of "solid" corporations
- Buy high quality income trusts
- Buy a short term ladder of CDs
- Hedge the dollar with the loonie
I may not want to do all of the others he suggests but the points made are good ones. The reason why I am writing about this at all is to show there are different approaches that should be explored and understood.
I write about taking process from different sources to create your own process.
My process for trying to game something like this would be to continue as I have been writing about, I have reduced exposure, I have talked about adding a double short fund and next week I will be adding a currency ETF for clients before the ZIRP news next Thursday ( I will write about that next week when I do the trade) all with the hope of missing a big chunk of a big decline.
At this point I don't think a 20% drop from here is in the cards (not that I have to be right). There is a fair bit of concern out there. In the current environment I think that big of a drop so soon could come from an external shock (which is always possible) or after a move higher from here that causes amnesia about all of the problems that confront the market these days.
I am on board with caution and a poor market climate but for now I don't see 20% down. To be clear my ego is not such that I will go down with the ship. I don't care about being right, the best thing for clients, IMO, is if I can miss a chunk of a big drop.
I think Bill's time frame is shorter than mine which makes for a different process and approach. Neither is better than the other. The answer for you might be in the middle.