Adrian Reid answers a viewer question about how to ensure a stock portfolio consistently makes money. He advises building multiple trading systems (rules) that profit across different market regimes—bull, bear, sideways, volatile, and quiet—and also systems that profit from transitions between regimes. He notes a specific example: a system that profits when the market turns from a bull to a bear can smooth portfolio performance by offsetting losses from long positions.
How do I ensure my stock portfolio is consistently making money?
And I've talked about this in another question where I talked about.
Making money consistently more broadly, and we talked about up markets, sideways markets and down markets, and having systems that profit from different market conditions. So I'm not going to go into a huge amount of detail here now, but just know that if you want to make money consistently, you need systems that will make money from different types of market conditions. Bull markets, sideways markets, bear markets, volatile markets, quiet markets. And you also need systems that will profit from the transitions. Right. I've got one system which makes a huge difference in my portfolio because it profits in the transition from a bull market to a bear market. That transition is one where you lose. You tend to lose a lot of money because if you're long on the way up, when the market turns, you may still be long and you're losing a bit of money until your trailing stops get hit. But if you've got another system that profits in that turn, then all of a sudden your portfolio is smoother. So you have to think about what can happen in the market and try and have a system or a set of rules that will help you make money in different market conditions.
