Harness Volatility in Bear Markets
By Mark Lyman
When the market is stormy and headlines scream “bear market,” many investors retreat to the sidelines, waiting for the sun to shine again. But what if there was a way to harness volatility even when prices are falling?
Enter the Quantelligent strategy: a disciplined, tech-driven approach that thrives on volatility, not just bull markets. In this article, we’ll explore how Quantelligent can keep your portfolio productive during downturns, and why infusing new cash at the right moments is crucial to maximizing gains.
How Quantelligent Works: A Quick Recap
At its core, the Quantelligent strategy blends two powerful investing concepts: Dollar-Cost Averaging (DCA) and Value Averaging (VA). Here’s how it works:
Regular DCA Buys: You invest a fixed amount at regular intervals, buying more shares when prices are low and fewer when prices are high. This smooths out your entry points and helps lower your average cost over time.
VA Profit Captures on Spikes: When the market rallies—even briefly—Quantelligent automatically sells a portion of your holdings at predefined profit targets. This locks in gains, even during turbulent periods.
Full Position Exits: Once your position hits a pre-set growth target, the system exits fully, resetting risk and freeing up capital for new opportunities.
Recycling Profits: Proceeds from profit captures are recycled back into the strategy, compounding your returns over time. Alternatively, a portion of the profits can be withdrawn to augment income.
Realizing Gains are NOT Bull Market Dependent
A common misconception is that you can only make money when markets are rising. The truth? Quantelligent’s real edge is capturing profits from volatility—regardless of whether the market is trending up, down, or sideways.
Every time the market bounces, even within a broader downtrend, Quantelligent’s rules-based system seizes the opportunity to sell small portions at a profit. These “mini wins” add up, cushioning your portfolio from deeper losses and sometimes even delivering gains in a down market.
The Role of DCA and the Challenge of Bear Markets
Dollar-Cost Averaging (DCA) is a powerful tool: by steadily investing through downturns, you lower your average cost per share, setting yourself up for bigger gains when the market recovers. But here’s the catch—if the market keeps falling and you run out of cash to invest, your ability to keep averaging down stops. At this point, you’re simply riding out the storm, waiting for a rebound.
Infusing New Cash: The Key to Continued Profit Captures
This is where many investors miss out. When your DCA funds are exhausted, injecting new cash into your portfolio is essential.
Here’s why:
Drag Down Your Average Cost: New cash lets you buy at even lower prices, further reducing your average cost per share.
Set Up for Profit Captures: With a lower average cost, even modest market rebounds can trigger Quantelligent’s profit-taking mechanism, putting cash back in your pocket.
Stay Ready for Volatility: Markets rarely move in a straight line. By replenishing your buying power, you’re always ready to capitalize on the next swing—up or down.
Why Volatility Is the Real Profit Engine
It’s not just rising prices that create opportunity—it’s the ups and downs. Volatility means prices are moving, and every movement is a chance for Quantelligent to buy low and sell high, even if the overall trend is negative.
Example:
Suppose you’ve been buying shares as the market drops from $100 to $60. With each drop, you add more, lowering your average cost to, say, $70. If the price bounces back to $75—even briefly—Quantelligent can sell a portion for a profit.
Common Misconceptions: Waiting for a Bull Market
Many investors believe that systematic strategies like Quantelligent only work when the market is going up. In reality, as long as there is volatility, there are opportunities to capture profits. The key is having the discipline to stick to the system—and the flexibility to add new cash when needed.
Conclusion
The Quantelligent strategy is designed to profit from volatility, not just rising markets. By combining DCA, value-based profit captures, and timely cash infusions, you can keep your portfolio working for you—even during downturns.
Don’t let a bear market sideline your investments. With the right approach, every storm is an opportunity.
