Sounds very interesting and spannend👍🏻👏🏻. Bookmarked for tomorrow to read at my leisure. 🤗 off the top of my head: Why the MSCI, where many small companies are "dragged along"? Especially with leverage, perhaps a focus on large caps would be good ?
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@VillaSpilla Firstly, there are not many leveraged 2X products in ETF wrappers, so we can't be picky.
Secondly, the grizzly bear markets described have the peculiarity that there are structural breaks.
Take a look at the top 20 positions in the MSCI World / S&P500 1 year before and 5 years after such a scenario. As a rule, these are completely different companies, since we do not know the winners of tomorrow, we buy everything and let the market do the rest.
If you can identify tomorrow's winners in the crash, then you don't need leverage, just buy the 10 or 20 winners of tomorrow.
I also think most investors are developing a misconception about bear markets. These V-shaped recoveries of 2020 and 2025 are the exception, only about 15% of all bear markets are so "mild". More common are U-shapes, which last longer, and then there are L-shapes, which can last up to 10 years, so 10 years with no return after inflation.
And I don't think most private investors are mentally prepared for this.
Secondly, the grizzly bear markets described have the peculiarity that there are structural breaks.
Take a look at the top 20 positions in the MSCI World / S&P500 1 year before and 5 years after such a scenario. As a rule, these are completely different companies, since we do not know the winners of tomorrow, we buy everything and let the market do the rest.
If you can identify tomorrow's winners in the crash, then you don't need leverage, just buy the 10 or 20 winners of tomorrow.
I also think most investors are developing a misconception about bear markets. These V-shaped recoveries of 2020 and 2025 are the exception, only about 15% of all bear markets are so "mild". More common are U-shapes, which last longer, and then there are L-shapes, which can last up to 10 years, so 10 years with no return after inflation.
And I don't think most private investors are mentally prepared for this.
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