Sunday, 4 August 2013

Are We There Yet?

The following is from yahoo Finance:
A study from Spectrem Group asked wealthy and affluent investors "what do you wish you had done differently in the crisis."
For the top earners-those making $750,000 or more-the No. 1 answer was "saved more." Ranked second was "done more research about finances on my own" and then "not taken on as much debt."
Their regrets have turned into real action-with possible impacts on the broader economy. Since the financial crisis, the wealthy have become the nation's top cash hoarders, filling up deposit accounts and money markets at a rapid clip.

Well, at least somewhere someone is being prudent.
That was something I have been shouting about from the rooftop for last many months.

George C. asked the following question:
Hi BB,
I have been reading a lot about cycles and they seem to be less and less reliable these days. What is the margin of error ? For example you mentioned a cycle top of July 25. We just pounded out a new high on August first. so what its the "zone" of this cycle top ? I also do not understand why shorting is not a good idea if one truly believes in the cycle, assuming there is some margin of error that could trigger a stop on short position. Otherwise we have to rely on broken support levels, moving average  crossovers etc.....
In this market I am losing faith in information. For the past several months I have read many credible articles and blogs, including yours that speak of extreme sentiment, record high margin debt. low levels of mutual fund cash etc...yet there is not even a moderate correction. I know things take time but I am wondering if FED printing can push this for many more years. Simply amazing !
Love your work and patience, just venting. I am afraid to go long for sure but have been for quite some time. 

And my answer was:

Hi George,
As you might have seen, I work from the side of being ultra cautious.
So I will take trade when everything that I watch line up.
When the trend is up and cycle is up, it is safe to go long. But when the trend is up but cycles have topped, I would stay away from taking any bets. Does not mean we should short. Because, we also need price confirmation.
As for now, the cycles have topped, but we have no sell signal. Therefore no going short. Going long is out of question. This is the time when greed overtakes retail and Mom&Pop gets in equity.
My up-side target for SPX is in the range of 1720-30 and we are not there yet. Last May, we went short but the indices kept going higher till everyone threw up their hands.
We are coming to that inflection point. No other market in the world is following the US market. So the US markets cannot just keep going on for ever. You might be interested to read the following:
http://www.mcoscillator.com/learning_center/weekly_chart/u.s._nearly_alone_in_making_new_price_highs/
So just hang on. Keep lots of cash on hand. Opportunities are coming soon. Gold & Silver will bottom in a month after another sell off. We will short bonds big time by Fall. Short equities big time.
Technical analysis alone will not get us anywhere in these markets. But patience will.

Hope that helps.

In my years of writing finance blog, I have actually come across only a handful of investors who are willing to wait and not be greedy. I had one subscriber, whom I shall call "The Troll". That guy would pay money for subscription and then do just the opposite of what I would say. I would scratch my head in bewilderment. For e.g. during the last correction, we closed our short position and went long XIV. After few days, the correction resumed and XIV was hit hard. I asked everyone to hang on tight with their XIV. But this A**hole sent mocking email, saying how smart he was and how he did not follow my advice and did the opposite by going long UVXY. Well, after a month, XIV is over 25% up!

And he is not alone. I see folks always trying to score on every turn, going in and out of positions almost every day. And I shake my head in disbelief.
Have patience folks. Don't listen too much to those talking heads in TV. They get paid to say stuff and sell snake oil. Only you can save your money. Wall St. wants to get their hands on your savings. They can do so when you are greedy.

I do not have to prove anything to anybody. I have made calls on record over the years and I think barring few and some in the early years, when I was still perfecting my system, most have come correct. I have a full time job which keeps me busy. I do the Newsletter and Blog as a hobby and I can do without A**holes. My record on gold and silver is close to 100% and I pray I am able to maintain that. But I am not trying to beat up my drum. All I am trying to say is that, whatever is your method, whomsoever you follow, you must have patience and not chase every shiny thing that catches your eye.

Stay Focused and stay nimble.

Good luck trading / investing everyone.


2 comments:

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