Gagan Rajpal
06-08

*Market Crashes & Rate Hikes: When to Start Picking Up Chips*

When markets crash, everyone asks the same 2 questions: 1) Is all the bad news priced in? 2) When do I buy?

*1. “Price in Rate Hikes” means*

Markets don’t wait for the Fed’s last hike. They fall _ahead_ of it. By the time rate hikes stop, stocks are usually already down 20-30%. The crash IS the market pricing in pain.

*2. When to start picking up chips*

Don’t try to catch the exact bottom. No one does. Use “chips” = small portions of cash.

*Simple rule: Buy in slices, not all at once*

Wait for 3 signals before you go heavy:

1. *Rates near peak*: Fed signals “maybe 1 more hike”. Fear is max.

2. *Capitulation*: Everyone’s selling, “stocks are dead” headlines. RSI <30, VIX >30.

3. *First higher low*: Market stops making new lows for 2-4 weeks. Shows sellers are tired.

*Example with numbers*

Say you have $10k cash. Nifty crashes from 22k → 16k on rate hike fear.

Don’t put $10k at 18k hoping it’s the bottom.

Split it: $2k at 18k, $3k at 16.5k, $5k at 15k-15.5k if we get there.

If 16.5k holds and market bounces, you bought some chips cheap. If it drops to 15k, your avg is way better and you still have bullets.

*Key idea*: You win by surviving the fall, not timing it. Start buying small when blood is on the street. Go bigger when others are most scared. Keep 30-40% cash even after first buy.

Markets reward patience + partial buys. Not perfect timing.

Nonfarm Payrolls Add Only 29K — Is the Rate-Hike Cycle Over?
September payrolls grew 29,000 vs 89,000 expected, prior 133,000; unemployment rose to 4.2% from 4.1%. October hike odds fell from above 60% a week ago to under 25%. Stocks rose: Nasdaq hit a record 27,353.68, closing +1.19% at 27,190.86; QQQ +1.02% to $749.58; S&P 500 +0.73% to 7,722.72; Dow +0.49% to 51,176.96. Bonds didn't follow: the 10-year added 4bp to 5.28%, highest since 2002; the UK 30-year gilt hit 6%. Hike risk is off the table, yet the long end rose anyway. How much does that worry you?
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment