![]() I wish you all the best, and good investing! While the Meta Strategy is not designed to exactly time a market top (which is impossible to do consistently), we can rely on it to preserve the majority of our gains by getting us out of the market shortly after the top, before the brunt of the next bear market. On the technical side market breadth and trend are strong, indicating above average probabilities for positive returns over a one-year time horizon. All of our strategy’s fundamental leading indicators have returned to signal a green light, which will likely revert to warn of danger well before we see the arrival of a new bear market. Such an increase in volatility shouldn’t cause us sleepless nights, as the underlying market environment is healthy and sound. More violent corrections and rallies, than the relative calm we have become used to over prior months, may very well play out. ![]() Below the surface, there are indications that the “plumbing” of the financial system had reached capacity limits, warranting these measures.įor us, this story serves as a reminder of what might happen on a larger scale in the coming months, as the stock market still continues to build up into a state of increased fragility. This was widely believed to be the cause for the 5,6% drop in the S&P 500, which reverted just as quickly when restrictions were put in place to curb the most excessive behaviors. ![]() In the process, these wide price swings forced large hedge funds, who were on the other side of the trade (as short sellers), to suddenly liquidate large parts of their holdings to meet their liquidity requirements. The GameStop saga, which played out over the past three weeks, is an excellent example of how the niche activity of retail investors can influence the stock market as a whole (as well as be harmful to participants who are just slightly off in their timing).Īfter the GME stock notched temporary gains of over 1000% for early traders (rising to prices widely above any sensible valuations), these gains quickly evaporated for most within just a few days (not coincidentally, just after being featured on every news source imaginable), leaving those late to the party holding the bag with losses of up to 90% down from the highs. Unfortunately, this phenomenon usually ends in a reaping, where many investors take enormous losses. The seductive lure of extraordinary gains, receiving full coverage in the main-stream media, emboldens investors to engage in dangerous practices. Investor speculation is reaching manic proportions. It is difficult not to become overwhelmed by conflicting information and opinions that are steadily increasing in volume. We are witnessing very interesting times in the stock market - to say the least.
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