Do Stock market Bears have valid arguments?
Yes, they do; the economy is in trouble, everything is being manipulated and blah blah. Are we discounting this? Yes, we are, whereas, in the past, we might not have fully discounted all these developments. Positive and negative arguments regarding the market have one thing in common; they are usually overblown on both ends of the spectrum. Remember, that today the goal is to be bombastic and to try to pass crap as Gold.
On any given day, as we stated before you can find multiple themes of why the markets should soar or crash? After looking at the markets for so many years, we find all these scenarios make for good amusement. For us, mainstream news is a place we go to when we have nothing better to do or when we are looking for alternative ideas. In other words, we go to mainstream sources to find out what we should not be doing. Euphoria and Fear are the same things as they both represent extremes; history and science both show us that an extreme state does not last for long.
A reversion to the mean is inevitable as this is the preferred state of any living thing, whether they are cognizant of this or not. When markets enter the feeding frenzy stage, or the crowd is Euphoric, the end is always near; always there has never been an exception, and there never will be one. The same applies to panic; it does not last for too long; it ends much faster than most individuals believe. The only reason it feels longer for most is that it takes them time to snap out from this state of panic, but the actual transaction is over rather quickly. This is the reason this bull market remains the most hated bull in history. The crowd and the experts cannot fathom why against all this backdrop of weakness, high unemployment (forget the manipulated data the BLS issues) and almost no real growth, why this market continues to trend higher.
Welcome to the world of Mass Psychology where the only thing that matters is the perception. What you think is real, is not and what you think is not is real; sounds crazy right. It is crazy, and that is the markets for you wrapped up in a nutshell. The markets are nothing but a cesspool of the worst emotions; they are driven by greed, lust, and ruthlessness. This is why we focus on the trend, and not positive or negative news or state of minds. Positive and negative are perceptions. A rainy day is a terrible day for one person, and yet a gloomy rainy day is a wonderful event for another. Who has the correct viewpoint? The psychologist will have you believe that being an optimist is the way to go. Rubbish we say, this kind of claptrap is for those who seek no improvement.
If you take the observers perspective, both viewpoints are wrong to a degree and here’s why. A day is a day with or without you. As you have been placed into the equation with your distorted views, you attempt to change the situation. Now the day has to have some colour added to it; you decide to view it as positive or negative. The reality is who cares what you think? The day goes on with or without you. It’s not good or bad, it just is. You are the problem as you add a perspective that is unnecessary, one that prevents you from seeing what is going on and that is what most individuals do when it comes to markets. The run to news outlets looking for clarity but walk away with a distorted view of what is going on. Focus on the trend, as everything else is your enemy