- Be patient. If this is truly a correction, it should last more than a few days. I estimate at least a month, maybe as long as three months. I'm going to wait for at least a 10% drop before considering a purchase. I may wait for as much as a 30% drop before making an initial purchase.
- Make partial purchases. Because I rarely ever pick the exact bottom, I am dividing my planned purchases into halves, thirds or fourths. That way I will have additional funds to buy additional shares should the stock decline further.
- Update buy list. I'll do an update of the buy list from my modified Unemotional Growth Investor system. Currently, I only have one buy on the list, Cognizant Technology (CTSH). I want to be ready to make some buys should steep declines occur.
- Sell some more current holdings. Many of the stock I own have rallied significantly since March 9. I have been selling into this rally. Today I took the opportunity to sell some more shares.
- Buy some inverse ETFs. Although they are not a good longer term hedge, I'm buying small positions in a couple inverse ETFs as a hedge against short term steep declines. The main one I'm considering is the Proshares Ultrashort Real Estate (SRS). I may also consider buying the Direxion Daily Financial Bear 3x Shares (FAZ).
Disclosure: At time of publication, I do not own any of the mentioned stocks or ETFs.
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This is not financial or investment advice. Please consult a professional advisor.
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