A. We have shared 5 strategies in a down market, now we will discuss 4 tactical strategies for more active investors:
1. Dollar cost averaging
You are not timing the market, you invest for the long term, and in the long term, stock market trend is up. With the DCA strategy, you can buy more in a down market.
2. Short the market or stocks
If you are pretty sure the market is in a down trend, you can either short the stock indexes (for examplshort Dow 30 - DOG, short S&P 500 - SH, short QQQ - PSQ), or short some of the high valued stocks.
You can also buy Put options, in this way, you can limit your potential loss to the amount of money purchasing the Puts.
3. Buy defensive stocks
In a down or volatile market, you can always focus on the stocks of the companies that consumers always need their products - the utilities, telecoms, fast foods, discount retailers, etc.
Usually you can also reallocate your portfolio to put more weight into Bonds, but in today's environment, with high chance Feds will raise interest rates, Bonds may not be a safe heaven either.
4. Buy commodities
The theory is, when stock markets going down, investors looking for some precious metals as alternatives. Look at the Gold vs. S&P index performance chart below - in 2008, when the stock market going down, GLD went up, and lately the stock market going up, the GLD going down.