♟ Do These 8 Things Now to Protect Yourself From a Crash

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"Protect yourself from a crash by following the eight steps below."

Karim Rahemtulla, Head Fundamental Tactician, The War Room

Karim Rahemtulla

Can you handle a 20% market correction and still have dry powder to buy high-quality shares that will be marked down 20% to 50%? If not, then you need to work on your position sizing and asset allocation.

Look at your portfolio - are you overweight in any one sector or stock?

Have you switched as much as you can from stocks to LEAPS?

If not, then why not?

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If you have positions that you are pretty sure you will not hold for more than a year or two and there are LEAPS available, then you should consider a swap to pull cash off the table and still have upside.

Below is a list of questions I ask myself when I look at my portfolio on days like today...

  1. Am I properly allocated?
  2. If I am holding a stock and not a LEAP security, do I have an adequate stop-loss in place?
  3. Can I switch from a stock to a LEAP security to pull cash off the table?
  4. Is the reason for owning the stock on Friday still the same today? If so, then I should not be panicking, but instead, I should start thinking about adding to my position.
  5. Am I position sized properly?
  6. Do I have any downside protection?
  7. Has something materially changed in the economy - either from the fiscal side or the monetary side?
  8. Do the companies I own have good fundamentals?

This is not a complete list. But it's a start, and it's something you should look to. While panic is a strategy, it's a poor one.

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