Gaining from market volatility

[+ SundayZip]

I was looking at the stock market a couple weeks ago when it became apparent that we're going to see a lot of market volatility due to <what can't be spoken here>. I decided to see what sort of investment growth someone can get from this volatility so I created a limit order in my brokerage account to automatically purchase a small number of shares of Vanguard Total Stock Market Index Fund ETF (VTI) if the price dipped below $260. A couple days later it did and I immediately created another limit to sell if the price hits $270. It did today. That's a gain of 3.8% in less than 10 days. I now have another limit order in place to buy again if/when it drops back down to $260. If/when it does, I'll buy and repeat. It will be interesting to see how this goes.   

[pubic_assistance]

Every week there will be new volatility. Which is always wonderful for the smart investors. I've made a bundle already in the last few weeks of the roller coaster.

Likewise ..every bit of money I've made on real estate was from buying during a steep decline in the market.

The best time to invest is the worst time for the market.

If you don't understand that...you shouldn't be investing by yourself.

[+ Vegas_Millennial]

I just looked at a graph of my net worth over the last 10 years.  It's gone up 3.5 times its value since 2015.  While most gains were slow and steady, my best performing years were my stock investments in 2020 and my real estate holdings in 2021.   Those happen to be the worldwide panic years of the Caronavirus.

The current stock market correction is but a blip compared to the drop in March 2020 and the lost 2021-2024 years where it took 3 years for my portfolio to regain its value to what is was in April 2021.

I'll keep doing what I've been doing

Edited April 26 by Vegas_Millennial

[BeamerBikes]

I played the VIX for awhile in 2016-2018.  Played again the past couple months.  I did alright, BUT, I don’t have the stomach for the gamble and watching the news cycles.  

I have a day job, and it distracted me too much. I also feel like the volatility is a rigged game. Folks are moving the markets with timed statements during market hours. Sooner or later, there’s going to be a crisis of confidence.  Because folks are going to see through the empty talk and lack of hard numbers while businesses and consumers are frozen.  
 

My advice from the volatility day trading, do it out of a Roth account so tax time isn’t a headache AND never stay in it when you can’t watch it.  If you stay in a position too long, it can drop like a rock quickly and then you have to hold until the next crisis.  These days that’s like a couple days…. Ha! 

[+ SundayZip]

My little experiment helps confirm that adage "time in the market beats timing the market".  If I would have just left the money in the stock market when I started the experiment, the value would have grown by 12%.  Instead, I got a modest 3.8% by holding the money outside the market in anticipation of buying low and then selling high. 
 

[+ SundayZip]

On 4/25/2025 at 5:43 PM, pubic_assistance said:

Every week there will be new volatility. Which is always wonderful for the smart investors. I've made a bundle already in the last few weeks of the roller coaster.

Likewise ..every bit of money I've made on real estate was from buying during a steep decline in the market.

The best time to invest is the worst time for the market.

If you don't understand that...you shouldn't be investing by yourself.

The problem with this strategy is you need take money of the stock market when "you think" it's at a peak and about to decline. But if the decline doesn't come and instead, the market continues to grow, you lose out on the growth.  

[TonyDown]

15 hours ago, SundayZip said:

The problem with this strategy is you need take money of the stock market when "you think" it's at a peak and about to decline. But if the decline doesn't come and instead, the market continues to grow, you lose out on the growth.  

Good point.  I have never tried to time the market.  I do rebalance my investments each year.

Pundits remind that cash is an excellent hedge against volatility. 

Whereas true investors might use some of their cash to invest when the market is down, pundits remind that domestic stocks were already overvalued and still are. 

One could conclude from how Berkshire Hathaway has been selling shares and their current large pile of cash, that cash is a good place to be, until the stock market offers solid value. 

I wouldn't be surprised if global sentiment towards US stocks and bonds falls.  So I am looking at more international exposure next rebalance. 

 

Edited May 19 by TonyDown

[Thelatin]

I just let it ride in index funds.  At this rate I can comfortably retire in 8 or 10 years.  Probably be a snow bird in Palm Springs.