Hello,
Similar to the range anxiety issue that many experience with electric cars, during market pullbacks, I always end of investing very defensively - concerned about running out of cash.
Most recently, I've come with a strategy that sounds good on paper to me. I was hoping to do some backtesting but I'm not very proficient at it unfortunately. I would be thankful if you could please evaluate my strategy and if it makes sense to you.
The strategy: come up with total free cash (X). With every 5% drop, double investment percentage in VOO. For example: 5% drop - invest 10% of X, if the market drops 5% more - invest 20% cash of X. So as the market continues to pull back, invest with more intensity. Now with this strategy, we run out of cash at total 20% pullback.
Now let's say market were to drop 5% (total drop of 25%) more. I'm thinking how about we sell the initial 10% of VOO and instead buy leveraged S&P ETF such as SPXL. And so on...
I would love to hear your feedback on this simple strategy of buying a leveraged S&P ETF by selling VOO when run out of cash. Thank you for your time.