Key insights
- An individual investor reduced leverage after buying into market pessimism too early. While the investor's actions reflect risk management, the overall impact on U.S. equities is slightly negative, suggesting continued market volatility and potential for further downside as investors deleverage.
I am one that believes in timing the market, and I only buy during pessimism. Once the Fear and Greed Index reached the teens, I began to top off positions in older holdings and lower my cost basis in newer ones.
Unfortunately, I began buying too soon. Sensing the sell-off exhausting due to the aggressive whipsawing, I continued to buy and lower my cost basis more and more.
Reaching the edge of what I'd consider comfortable leverage, I started to put in sell orders in some of the higher lots...and with today's aftermarket pop, I was able to fully de-risk.
Thank you volatile market.