This post is an interruption of the normally scheduled programming.  I wanted to comment a bit on the volatility in the market we’re experiencing.   I don’t think this market drop has taken anybody by surprise.  Maybe the suddenness, but it was clear the market was getting a little ahead of itself (especially the Chinese Market).   I certainly expected some pull back, and sold some calls on my stock holdings in anticipation.  Not a lot but some.

However, I think the important thing to keep in mind as a long term investor, market swoons represent opportunities to buy stuff cheap – that’s why you should always have some cash at hand in your brokerage account ready to swoop in to buy a stock that you may have thought was too expensive before.   I’m not a market timer, and prefer to lock in long term capital gains by holding my investments at least two years.   However, I do think as a part of that strategy both sell covered calls and put options represent excellent opportunities to hedge your portfolio.   The biggest problem with market timing other than tax consequences is that if you’re investing in the long term is question of where are you going to move the money into?  Of course you can just wait for a bottom.   But then you’ve got to be right about both the top and the bottom.  I might be arrogant enough o know one of the two but not both.   Being a natural bull, I generally find it difficult to sell outright, or sell covered calls, but I’m trying to learn to more aggressive with those tactics.    Sell High, Buy Low.  It’s that simple, right?