We are not in Kansas anymore, Toto.
Just as Dorothy learned that Oz was different than Kansas, new traders, perma-bulls, and buy-and-hold investors are learning that a downtrend and market correction is not the same as a bull market or range bound market. Oversold levels can become more oversold, lows can get lower, and price support levels don’t matter long term. Young buy-and-hold investors that have loved the ‘theory’ of buy-and-hold are seeing real money evaporating every day from their real accounts, and are beginning to ponder if there may be a better way to exit before a correction.
The buy the dip crowd are probably stuck at much higher price levels waiting to get out on rallies and creating resistance. A lot of value investors are wishing they had more cash to put to work because they may already be in underperforming stocks. Growth stock investors hopefully had an exit plan to lock in profits, because the FANG stocks have pulled back into mini-bear markets. A lot of day traders think these markets are great!
Traders and investors should already know their time frame and the strengths and weaknesses of their methodology. When a market changes, your system’s performance changes with it. Knowing what kind of market you are in and what works is the key to limiting losses when a volatile tornado takes you out of Kansas and you end up in OZ, where the price action has changed dramatically.
There is no better place to make money than a strong bull market, but we are not in Kansas anymore.