There was a HUGE amount of unprofessional, emotional, amateurish. moronic commentary yesterday about the “crashing” stock market. People are insane. Wow! This is discussed here and here. If you want to get an idea about what it takes to have a professional, workmanlike attitude about markets – then read on. If you want to eventually be in a position to choose to do only what you want to with your life (only do the type of work that you’re passionate about, or only do those things which you’re passionate about), then read on.
But if you’re attracted to hyperbole and total uselessness, and you want to be on the wrong side of markets, then don’t bother reading this:
From 2/6/18, into the sea of red all over the globe:
You see here is the situation we are in with the debt. The world got hammered, plastered, wasted with the declining yields for 35 years, especially the last ten years, just an outright “kegger” galore. Virtually everyone/everything believes low rates are here forever, and the world is designed around low rates. And now we will watch as the higher rates, higher payments, lower credit quality, lead to even more borrowing, etc.. Also, the Trump tax cuts will morph into new stealth tax increases in a few years. Governments around the world are in huge trouble. And all of this is extremely bullish for almost everything (long-term) – except for bonds. But the three things which I have kept emphasing – “long-term” (not short-term) and “dampening volatility” and “opportunity”.
I’ve discussed this idea for awhile, and again a few weeks ago – “The volatility in assets will follow this year, for it is the low bond yields, especially for the last few years, which has greatly helped to dampen volatility.”
From yesterday – “It is the low rates, especially the last few years, which has smothered volatilty. That is history.”
From 1/6 – “Bond yields are continuing to push higher, but I am aware of this overall area with my long put position in TLT, as the always way behind/late to the party crowd is getting very bearish, and the potential for bond selling to weirdly lead to bond buying, and a bigger bounce before another round of selling. For instance with the effects on the stock market.”
And yes, yesterday the “bond selling led to bond buying” meaning the bonds caused the stocks which caused the bonds (and still long TLT puts). And that is why yesterday I said –
“Bonds have gotten clobbered, a rally back to 122 on TLT (long puts) is a possibility.”
The low rates were smothering the volatility, forcing people into buying “esoteric” instruments which no one understands, like derivatives, or even basic junk bonds, looking for extra performance and income. Yet it is old-fashioned trading itself, and all of the nuances, which is by far the best approach. Years ago I suggested that people learn to trade markets, because the complacency and the lack of volatility would not last, and down the road markets will need to be traded, not “sat in”. And my advice stands.
Also, we get in these wild moves, and people rush for the other “exotic” instruments, like the VIX products, or bearish ETFs, a very amateurish move, while of course again ignoring and not spending the 12-18 months to learn how to trade. It is the trading knowledge, ability, and experience which gets us thru the volatility, not exotic instruments. “At the end of the day” it is about the overall performance, not the rushing around, flailing around, catching the latest moves. Overall, it’s not the instruments, the “movers”, the short-term wildness and chasing, it’s about building a solid approach over time, focusing on honing that, believing in it, and not deviating from it based on the latest moves. We ned to learn to be pretty good about anticipating (well ahead of time), not reacting. And BTW, there is nothing wrong with a professional, prepared, experienced approach which uses the “exotic” instruments.
In the meantime, I do not remotely believe the bull market in stocks is over, not even close, but I do believe volatilty is here to stay, and I do believe in opportunities being more available going forward. And I do not believe in the very amateurish gold permabull theory that the “crashing stock market” will cause gold to soar.
As to stocks, for the last few days I have not given symbols. Since starting this website, I have given this advice at times – don’t “press it”. But I’m looking thru some of the wreckage, strong stocks which haven’t “broken down” like ABBV or IMMU (long), or former strong stocks which have broken down like OSTK (long), or stocks in accumulation like IOVA , or stocks which have recently broken out like INTC. I have given out numerous stocks which fit these categories.
I talked about this idea yesterday – “Turn Around Tuesday” – an old Wall Street saying.
I had two crypto losses of 8% yesterday in BTC and ETH. I’m in again, but was much more focused on taking 1/2 profits (7180), and now have set scratch stops. The cryptos are great trading markets.
The Canadian pot stocks had great turnarounds yesterday, and I discussed that very potential in the weekend scanner video.