45% Decline over Next 3 Years?

[povertystrickenbastard]

This method would take more work and involve more risk, however in times of "uncertainty," being fully invested in a market neutral portfolio can hedge out the downside risk you fear...

......

The only way you lose on this market neutral position trade (often called a “pairs trade”) is if Energy Select Sector SPDR ETF (XLE) outperforms Vanguard S&P (VOO).

Creating an elaborate hedge is going to hedge your wins as well as your losses.  If I'm invested in index funds I would like my investment value to go up when the market goes up.  Using this strategy if XLE goes up along with the market (which surely is not a stretch of the imagination to think might happen) then I make no money.  So we wait out all these bear markets and doom and gloom and finally the market is on the up and still no money made!  Now you need the market go up and XLE to not go up, jeesh!  We're making it harder.  Why?  Just embrace the variance, over time the stock market makes money.  Take your wins and take your losses, keep investing even when the market is down, it makes you even more money over time.  There is no need to hedge out your wins and losses.

[patrickza]

Add me to the school of I don't think it's going to drop 45%, but I really hope it does, preferably tomorrow. I'm still working and would love to stock up on a discount as I plan to fire in 3 years.

[rmendpara]

I really enjoyed the 10% pullback in the past few months... though it's reversed in the last few weeks. I was able to pick up some stocks at better values than I otherwise would have gotten with my available cash each month when I normally put together excess cash and buy something off my list.

If there was a decline which lasted 1+ years, that would be even better! Would LOVE LOVE LOVE to find the Dow back <14k (and presumably a lot of major companies at 20%+ discounts to today).

A 45% drop? I'd be in love.

[SpiritualGangsta]

A market neutral portolfio would have made you money during this:

http://www.thedigeratilife.com/images/japanchart.png

If you only owned index funds.. you would be in for a multi-decade monetary quagmire.
In the midst of a raging bull market... that now seems to be stuck in a horizontal trading pattern.. hedging would be a wise move.