US Broad Market Cost Basis - Large Equity Cushion for Pullbacks!
I have discussed a number of times of current position of continuing being long in the US SP500 index.
One aspect of my analysis is fundamental; another aspect is reviewing the market's on-average cost basis and realized PnL.
What is evident from this picture is the 'buffer' or open unrealised gains currently sitting in the market.
(Contrast this with TSLA - and it's quite a different picture)
This is an important observation because what it means is that the market can pull back quite a lot, and still retain a net overall profit, and no (bull) trend change.
This provides the basis of understanding when to add to potential longs or engage in a short term swing trading to the upside rather than potentially misunderstanding a pull back as a market crash.
Not outlined in this chart is the fact that only about 20% of the market (based on market capitalization terms) is swing trading with this cohort's cost basis being around minor swing lows. Call writing has been a great strategy for some on this fiscally inspired bull run!
One aspect of my analysis is fundamental; another aspect is reviewing the market's on-average cost basis and realized PnL.
What is evident from this picture is the 'buffer' or open unrealised gains currently sitting in the market.
(Contrast this with TSLA - and it's quite a different picture)
This is an important observation because what it means is that the market can pull back quite a lot, and still retain a net overall profit, and no (bull) trend change.
This provides the basis of understanding when to add to potential longs or engage in a short term swing trading to the upside rather than potentially misunderstanding a pull back as a market crash.
Not outlined in this chart is the fact that only about 20% of the market (based on market capitalization terms) is swing trading with this cohort's cost basis being around minor swing lows. Call writing has been a great strategy for some on this fiscally inspired bull run!
