Part of the difficulty is knowing when we are after a downturn.
For those who want to try their mettle:
A) Here’s the SPY (SPDR S&P500 Investment Trust, tracking the S&P500 Index) on a 2 years period: down 27%, then up 15% from the bottom. Time to buy?
B) Same exercise with VFIAX (Vanguard 500 Index Fund Admiral Shares, tracking the same index) during another 2 years period: down 19% then up 15% from the bottom. Time to buy?
Agree 100%. buy low & sell high is easy to preach but difficult to do. Plus you have to have money on the side.
Below interesting analysis.
Bottom line market goes down 15%, wait a little is not a 20% correction and buy. As soon as hit over 20% correction, it’s quite rare, just buy.
Hey everyone,
with the recent downwards trend did someone actually put the strategies into practice we talked about?
I am considering going on portfolio margin and slowly leverage up to max 2x buying each month as long as VT is under my average buying cost.
Can i ask you what you plant to do if: once you are at x2 and it keeps dropping?
Seeing @johndoe1’s thread on leveraged portfolios I remembered this article I read a while back that analyzes Hedgefundie’s portfolio: Why Not Use Leverage? – Another Tug on the Lever – Mindfully Investing
To me, it’s interesting to see how leveraged portfolios might behave depending on different market conditions and sequences. It’s not only about that “freak” risk of having a 33% single-day downturn, but there are also longer-term risks.
Thanks, this actually helped me staying away from the temptation of leveraged ETFs 
BTW, is there any unbiased (non-corporate) academic research on long-term investing in leveraged ETFs, adressing volatility decay, returns in different market conditions and reliable long-term backtesting? Haven’t found much helpful stuff, e.g. on Hedgefundie-type strategies. I wonder why?
This guy likes to leverage standard portfolios (link from @kraphael )
One strategy that I am following is Lifecycle Investing which has been investigated and backtested by two professors from Yale.
The basic concept is that young investors can profit by using margin which basically let’s them invest their future (much higher) earnings now.
In practice that means taking on reasonable leverage (up to 2x) and then deleveraging with age.
Doing this with portfolio margin on ibkr suits my risk tolerance as very significant dropdowns would be needed to cause a margin call.
Not exactly what I’d call academic research, but interesting nevertheless 
Assuming high interest rates at current levels persist, wouldn’t you bleed out slowly?
They have tested with margin rates as high as 5% and still found a positive edge. So we still have some way to go. 
Excellent, going to dig into this, just out of curiosity, you already got me at mentioning Yale professors
Risk parity is supposedly sound, and works through leverage (but should leverage the bond component not the volatile assets).
Tho in practice it’s hard to implement diy and there’s been some “interesting” correlations in recent years.
