r/stocks
Selling out to avoid oil shock risks
Author plans to sell index holdings to hedge against potential oil shock risks, prioritizing capital preservation over missing out on modest gains.
- Potential oil shock in the next 1-12 months poses a significant downside risk not fully priced in.
- Asymmetric risk-reward: risking a 20-30% loss to avoid missing only 1-5% upside makes selling rational.
- Geopolitical tensions and supply constraints suggest high probability of negative market impact.
I buy a certain amount of stocks every month into a broad index fund. For me, this is the easiest way to invest and I know it’s impossible to time the market.
However, I feel it’s hard to justify staying in the market right now. Are the risks of the oil shock correctly priced into the current prices? You would assume so, but a lot is pointing towards some sort of shock down the road (1-12 months from now). And if it does happen, it looks to be quite bad. It is not possible to time the market, but if you can see a meteor coming at you and there’s a medium-high risk it will hit you, why not play it safe?
Its hard to imagine that the market will increase 10-20% the resting the year even if war ends right now. But it’s not hard to imagine it falling at least that much if it continues. So as I see it, I’m risking missing out on 1-5% gains rest of the year in order to hedge against a potential 20-30% loss.
Am I being an idiot trying to time the market, even tho I shouldn’t?
My burger is missing the crispy onions. Pls fix.
I asked for light mayo
another day another “I know not to time the market but I want to time the market” post
Are you planning on withdrawing the money within the next year or two anyways?
Why not just hold or trim and put some profits into oil stocks?
Just don't buy oil futures like the dude on WSB who ended up needing to take delivery of like 60k barrels during COVID because he didn't know the difference between stocks and futures. He bought when the contracts were negative and thought he was going to get paid by the oil companies at expiration, but didn't realize if he held to expiration he had to take delivery.
If this is in a taxable account, the math is heavily stacked against you because of the immediate tax realization. If you sell $100k with a $30k gain, a 15% federal capital gains rate plus state tax triggers an immediate $4.5k+ tax bill. You now only have $95.5k to buy back in. To break even on that transaction alone, you need the market to dip more than the tax drag itself just to end up with the same share count you started with. Is this inside a taxable account or a tax-advantaged retirement account? That changes the math on the friction of moving in and out of the fund.
I saw the news feed . There was a super tanker on a trailer outside his house lol
Nobody has any balls
Yes you are being an idiot. Just buy index funds and ignore the noise.
time in the market beats timing the market.
Sigh...
I know it’s impossible to time the market and, yet, I'm going to try....
If I had a dollar for every time someone comments or posts on Reddit admitting that it can't be done, followed by their attempt (that usually backfires), I would not need to invest in the stock market.
Good luck timing your way back in when things go higher.
OÑN