| | | HI Don,
The markets are based on mass psychology and I believe that the angst and concern that you are expressing are a normal and to be expected manifestation of where we are in the investment cycle.
. But I would like to suggest your comments are based on rational thinking and using the past as a guide. But in this new world of irrational and AI driven, non-emotional investing / trading. I really think many of the old investment philosophies have to be put on the shelf.
How else can you explain the total lack of concern shown by the VIX in a time when the political world is in total disarray, Companies like Amazon and now Telsa no longer need to be profitable to justify huge market caps. Where a known nut case is threatening to attack the U.S. with Nukes and the market continues to rise. Where ETFs are replacing mutual funds and now outnumber the stocks they invest in. Where oil prices are destined to decline as the world finds new ways to process oil reserves, and also reduces its demands for automobiles and electric cars will become more common.
I feel you can't just accept what has happened in the past based on historical trends providing insight to the future when the emotion of the masses is being removed.by computer driven strategies using A.I.
Of course, there will be a crash at some point but it will need to be different than in the past. There is just too huge of a buying the tip safety net below this market, So it will take a series of events to bring it down and keep it down for more than a few weeks.
You know every 7 or 10 years when there has been a bull market in stocks... It seems that things have changed and the old rules no longer apply.
that is as old as the way markets work. Let's see what things look like on Nov 1st.
AI and the huge oversurge of passive investing in ETF's is going to create a blowback that will be every bit as negative on equity prices as have the reasons given for multiyear bull markets that created overvalued
situations that were assuredly thought to be "The New Normal"
2 and 3 years from now .... people are going to be going to be shocked when 10 year yields have gone north of 3%... and then 4%.... they will spend some time there.... but we will be at 5% in 3 years and it
has massive implications for how assets will be valued and what investor concerns will be.
I would be shocked if investors such as yourself were not as befuddled by what is going on as you have.
I know that you have really focused on the VIX and related products and the VIX is nothing at all like the VIX that I worked with back in the 1995, 1996, 1997, 1998.,
The VIX is a particular options volatility yardstick that has really been blunted by everyone having 100 times the correct pricing calculations that are available in Ameritrade's product, Interactive broker, Tradestation etc. plus it has become so in vogue to sell premium that has muted the moves in the VIX.
The central banks with their 15 + Trillion of Credit creation since 2008 and their manipulation of the term structure of interest rate yield curves have really been given us a long period of historically abnormal behavior.
Companies like AMZN and Telsa have been around and had super sized valuations at the end of all of these multi year cycles of stock market speculation excesses.
With Special Prosecutor Mueller having an unlimited ability to examine all of DJT's fiancial dealings, coupled with the 4 ways that the Congress can not achieve anything.... I suspect by the Spring of 2018, you and an entire generation of investors are going to be shocked at how bleak things may well look.
We shall see. AI, machine learning, autonomous vehicles, deep learning is going to eliminate so many jobs... that there will develop a very negative mass mood in the US and indeed I suspect it will be global in nature.
John |
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