This builds upon the below idea:
And this amendment to it:
===
Day to day, week to week and month to month looking at the market it becomes easy to start to wonder if this will ever come down. After all the reasons it's had to do so, all the threats the market has defied and shook off, the illusion of a bulletproof market is strong - and a true reversal of this is hard to comprehend.
Here's a little thing to do that helps with a more general perspective. A thought experiment. Let's say in 20 - 30 years time SPX had made a top, crashed and went into a sustained downtrend. If a kid who was not around to see it all happen asked you how the bubble formed and popped - would it be hard to explain?
No! It'd be blatantly obvious.
"Well, there was once a thing called the FED in a country that used to be known as America...". Okay, a bit dramatic. But it'd not be hard to explain that the FED policies of a decade or more led to conditions that made it easy for the market to go up and then when these policies reversed (After a slight time lag) the market trends reversed.
People were ultra optimistic about markets even though the logical outlook for them was terrible because markets had overcome so many things before. You'd have missed out on so much before being cautious in the time "Market scares" were going on. Bears mad their big brain cases and the bull market laughed at them. So, everyone thought it could go on.
Bears sounded smart and bulls made money. While it lasted.
I used to look at the conditions of markets into the end of the mega bubbles of history and wonder what people must have been thinking. Now, I know the answer to that. I feel I've observed it in the market around me. People were not thinking. They were conditioned to learn thinking equals pain and following equals reward in the market.
Those who were the thinkers were the butt of the jokes. Every mega bubble has had them. The Babsons of the 1920s. The Buffets of the 1990s in tech and in our modern day we have the Dalios and Burrys. Exceptionally bright people. Well read. Accomplished. Evidently successful in their field previously - being mocked by username "Permabull-ganggang" on social media.
It is very much easier to see what is right in front of you than the things that may be right ahead of you. The longer the bull goes on, the more it is mis-forecast and the more it does things people passing themselves off as "Bear market experts" say are "Impossible" (Eg: See things popularly said about a new high in Jan of 2022) - the easier it becomes to expect more.
I do not think the problem is bubbles can not be seen setting up. The problem is actually they can be seen setting up too quickly and then by the time they actually pop there's a cried wolf effect where people are bored of listening to the warnings and ready to ignore even the most egregious of warning signals.
As Burry says, "It is ludicrous to believe asset bubbles can only be understood in hindsight". However, with the power of hindsight, it really would not be hard to understand how the conditions we now find ourselves in resulted in a spectacular asset bubble and a generational defining reversal of that bubble.
All bubbles have formed in a few clearly definable phases. It's much easier to do this after the fact than in real time (Hence the need for plan revisions along the way) - but what we have is a very clear example of all the stages of a mega bubble. Either having complete or being due to complete in the next leg.
====
I think the mega bubble scenario looks all the more likely as things progress. It looked quite likely in 2020. Since then we've seen things highly consistent with the mania into new paradigm stages. Plan to do a lot of work covering the work behind my theory for this and also actionable trade plans for dealing with it.
While I may be regularly talking about macro bear market risks (At length, in some instances) it is likely my overall near term bias is bullish. Just working on the big crash risk stuff because it's a lot to explain and there's not a lot of time when it's happening to do so. It's possible to be working on how to protect against extreme bear risk while still being long.
In fact, one may say that's the wise thing to do in such conditions.
And this amendment to it:
===
Day to day, week to week and month to month looking at the market it becomes easy to start to wonder if this will ever come down. After all the reasons it's had to do so, all the threats the market has defied and shook off, the illusion of a bulletproof market is strong - and a true reversal of this is hard to comprehend.
Here's a little thing to do that helps with a more general perspective. A thought experiment. Let's say in 20 - 30 years time SPX had made a top, crashed and went into a sustained downtrend. If a kid who was not around to see it all happen asked you how the bubble formed and popped - would it be hard to explain?
No! It'd be blatantly obvious.
"Well, there was once a thing called the FED in a country that used to be known as America...". Okay, a bit dramatic. But it'd not be hard to explain that the FED policies of a decade or more led to conditions that made it easy for the market to go up and then when these policies reversed (After a slight time lag) the market trends reversed.
People were ultra optimistic about markets even though the logical outlook for them was terrible because markets had overcome so many things before. You'd have missed out on so much before being cautious in the time "Market scares" were going on. Bears mad their big brain cases and the bull market laughed at them. So, everyone thought it could go on.
Bears sounded smart and bulls made money. While it lasted.
I used to look at the conditions of markets into the end of the mega bubbles of history and wonder what people must have been thinking. Now, I know the answer to that. I feel I've observed it in the market around me. People were not thinking. They were conditioned to learn thinking equals pain and following equals reward in the market.
Those who were the thinkers were the butt of the jokes. Every mega bubble has had them. The Babsons of the 1920s. The Buffets of the 1990s in tech and in our modern day we have the Dalios and Burrys. Exceptionally bright people. Well read. Accomplished. Evidently successful in their field previously - being mocked by username "Permabull-ganggang" on social media.
It is very much easier to see what is right in front of you than the things that may be right ahead of you. The longer the bull goes on, the more it is mis-forecast and the more it does things people passing themselves off as "Bear market experts" say are "Impossible" (Eg: See things popularly said about a new high in Jan of 2022) - the easier it becomes to expect more.
I do not think the problem is bubbles can not be seen setting up. The problem is actually they can be seen setting up too quickly and then by the time they actually pop there's a cried wolf effect where people are bored of listening to the warnings and ready to ignore even the most egregious of warning signals.
As Burry says, "It is ludicrous to believe asset bubbles can only be understood in hindsight". However, with the power of hindsight, it really would not be hard to understand how the conditions we now find ourselves in resulted in a spectacular asset bubble and a generational defining reversal of that bubble.
All bubbles have formed in a few clearly definable phases. It's much easier to do this after the fact than in real time (Hence the need for plan revisions along the way) - but what we have is a very clear example of all the stages of a mega bubble. Either having complete or being due to complete in the next leg.
====
I think the mega bubble scenario looks all the more likely as things progress. It looked quite likely in 2020. Since then we've seen things highly consistent with the mania into new paradigm stages. Plan to do a lot of work covering the work behind my theory for this and also actionable trade plans for dealing with it.
While I may be regularly talking about macro bear market risks (At length, in some instances) it is likely my overall near term bias is bullish. Just working on the big crash risk stuff because it's a lot to explain and there's not a lot of time when it's happening to do so. It's possible to be working on how to protect against extreme bear risk while still being long.
In fact, one may say that's the wise thing to do in such conditions.
We may be inside of a crash event to 3000 in SPX.
Read the full case with backlog of historic analysis/forecasts here: holeyprofitnewsletter.substack.com/p/the-case-for-3000-in-spx
Read the full case with backlog of historic analysis/forecasts here: holeyprofitnewsletter.substack.com/p/the-case-for-3000-in-spx
Declinazione di responsabilità
Le informazioni ed i contenuti pubblicati non costituiscono in alcun modo una sollecitazione ad investire o ad operare nei mercati finanziari. Non sono inoltre fornite o supportate da TradingView. Maggiori dettagli nelle Condizioni d'uso.
We may be inside of a crash event to 3000 in SPX.
Read the full case with backlog of historic analysis/forecasts here: holeyprofitnewsletter.substack.com/p/the-case-for-3000-in-spx
Read the full case with backlog of historic analysis/forecasts here: holeyprofitnewsletter.substack.com/p/the-case-for-3000-in-spx
Declinazione di responsabilità
Le informazioni ed i contenuti pubblicati non costituiscono in alcun modo una sollecitazione ad investire o ad operare nei mercati finanziari. Non sono inoltre fornite o supportate da TradingView. Maggiori dettagli nelle Condizioni d'uso.