Investing For Dummies: Lesson 1

Updated March 2023

The tides of trend have shifted from Bullish to neutral, but before you get your knickers in a knot, understand that this might be a good thing. When the markets are trading in the highly oversold range on the monthly charts, as is presently the case, it tends to be an excellent long-term omen. Furthermore, if the trend does not worsen, it could lead to a second (primary) trigger for a FOAB. It’s hard to envision the trend declining when the markets are trading in the insanely oversold range on the monthly charts. This change in direction could also be viewed as secondary support/validation for our hypothesis that the markets will trade within a wide range for up to 36 months.

As a precautionary measure, we have temporarily halted all high-risk purchases denoted in brick red or bright red text. Only sell orders will remain valid until we reassess the situation. It rallied as projected, and it traded within the suggested targets. Currently, the Dow trades in the insanely overbought ranges on the daily charts, so the odds favour a sharp pullback. A test of 32,500 to 32,700 is likely, with a possible overshoot of 32,100.

Although the aforementioned scenario has yet to materialise, money managers have covered over $300 billion in short positions, alleviating some upward pressure. However, the market’s momentum remains strong, with the Nasdaq being the most robust index, followed by the S&P 500. Fear of missing out (FOMO) is also a factor that could add to the volatility. The markets are anticipated to rally until roughly the end of March.

As of the February 14 update, the projections made on January 30 are coming to fruition, albeit taking a bit longer. The Dow has traded as low as 36,638, testing the suggested range, and there is a possibility that it may trade as low as 32.1k before undergoing a turnaround. While the overall pattern remains bullish, it remains to be seen if the markets can follow through and rally until March. Nonetheless, only individuals willing to take on additional risk should consider opening new long positions at this stage.

Mass Media Equates To Master Of Lies

The media often pushes a narrative of fear and doom, trying to incept new ideas into the masses. They collect waste and try to spin it off as valuable, making dire predictions about Brexit, the US-China trade deal, and lower rates. However, history shows that fear is often used as a weapon, and the ones to fear are those using this weapon. Individuals prefer freedom over serfdom, and independence rarely leads to chaos unless it impinges on another’s sovereignty. The media’s narrative is often the opposite of the truth, as demonstrated by the experts who have predicted multiple world-ending events and Dow crashes that have not come to pass. Looking at trends and history rather than succumbing to fear and doubt is essential.

Lesson Number 2 in Investing For Dummies

It is true that many experts and politicians have made dire predictions that have turned out to be wrong. This is a recurring theme in the media, and taking these predictions with a grain of salt is important. The market has continued to rise despite predictions of doom and gloom, and politicians who opposed projects like Amazon’s HQ2 may have cost their constituents jobs and tax revenue. It is important to remain sceptical of those who use fear and uncertainty to push their agendas and to look at the facts and trends before making investments or political decisions https://bit.ly/2FJNJf4.

AI Is advancing Rapidly.

The idea that AI is rapidly advancing and could soon surpass human intelligence is a topic that has been discussed and debated by experts in the field. While some believe such a milestone is still far off, others believe it could happen sooner than we think. The potential implications of such a development are profound, as it would fundamentally change how we live and work.

One potential consequence of AI becoming more advanced is that it could enable smaller companies to compete with larger corporations more effectively. This could level the playing field in many industries and disrupt the dominance of established players like Amazon. However, it’s worth noting that AI is not a panacea, and many challenges are associated with implementing it effectively.

It’s also important to consider the ethical implications of AI and how it is developed and used. As AI becomes more advanced, it raises questions about whether it will be used for good or for harm. We must take a responsible approach to developing AI and consider the potential consequences of its use.

While we can’t predict the future with certainty, it’s clear that AI is a rapidly evolving field that will significantly impact our lives in the years to come. As such, it’s essential to stay informed about the latest developments and to consider the potential implications of these advances.

Crises: Silent Opportunities

During times of crisis, such as the current coronavirus pandemic, investing in stocks with a long-term perspective can be an excellent opportunity. However, it is important to not invest all of your funds at once but instead invests in small increments to lower your average entry price in case the stock drops further.

At the Tactical Investor, our minimum holding time is typically several months under normal market conditions. However, during times of crisis, our holding timeframes may lengthen due to the potential for significant profits. While the short term may appear chaotic and uncertain, it is during these times that the best investment opportunities can be found.

It is often easy to buy when the market is doing well, and stocks are priced at a premium. But the best bargains can be found during times of crisis and market downturns.

Historical timelines

Forever QE

Forever Quantitative Easing is here to stay, and until it ends, every backbreaking correction must be treated as a mouth-watering opportunity.

The term forever QE has just started to come into play recently, and mainstream media will most likely embrace this term and weaponise it. However, we first addressed this phenomenon back in 2015 and here is the link that details what was said at that time https://bit.ly/2CILKGi

The outlook has only worsened since then; the new tax breaks corporations got will be used to purchase more shares, and the reason is simple, it pays more in the short term to boost profits by reducing share count than investing in the company. Corporations will continue down this path until new laws are enacted, and they will become more emboldened with time. Gone are the days when there was a semblance of caring for the investor; insiders are only concerned with how much they can make and don’t care if they destroy the company. Share buybacks are rising and have continued to grow since we first posted that article.

Investing for dummies Tip 3

Forever Quantitative Easing Fuelling Buyback binge:

Buybacks, a popular method for companies to return value to their shareholders, have reached a record high in the U.S. According to Michael Schoonover, the portfolio manager of the Catalyst Buyback Strategy fund, the total U.S. stock repurchase announcements crossed the $1 trillion mark in mid-December 2018. This is the first time it has ever happened. Additionally, there has been a significant pickup in recent weeks as markets have been in a downdraft.

Nearly half of the $1.08 trillion in buyback announcements are concentrated in 19 companies, accounting for $460 billion. Despite the record-setting buyback authorization levels, 2018 has been unusual because fewer companies account for the total buybacks. Buybacks signify that companies are confident in their prospects and have excess cash on hand to return to shareholders. However, they have also been criticized for prioritizing short-term gains over long-term investments in the company. Full Story

Take this as an early warning that should the media jackasses start pushing another B.S story, instead of panicking, one should break out of a bottle of champagne, and as the masses panic calmly sip on that champagne and build a list of strong stocks one always wanted to purchase. For those allergic to work, the option is simple; sit back and relax, for we always view crash type events as opportune moments when the trend is positive. Market update Feb 28, 2019

Perception Vs Reality

It’s important to remember that no bull market has ever ended in a state of fear or anxiety. Despite the media’s attempt to create a new narrative over the past few years, they have failed to do so. This shows that news, in general, should be treated with scepticism or viewed with a humorous lens.

Regarding the stock market, until the Fed changes its stance, sharp corrections should be viewed as buying opportunities. Even backbreaking corrections should be considered “once-in-a-lifetime events” as long as the trend is positive. Our role is to inform you if the trend is positive (up) or negative (down).

The world will witness a Fed that has decided to make a cocktail of Coke, Heroin, Crack and Meth and take it all in one shot. Imagine what a junkie on this combination of potent drugs is capable of doing, and you will have an idea of where the Fed is heading in the years to come. Market Update Feb 28, 2019

Investing For Dummies: Lesson 4

When uncertainty is running high, the markets are likely to trend higher.

The masses are still uncertain, and we find uncertainty adorable; nothing is more bullish for the markets than an undecided crowd.

The best time to buy is when the masses are in panic mode, and when one feels far from certain about the future of the markets; certainty is the secret word for failure when it comes to the stock markets. Market Update Feb 28, 2019

According to recent readings, the number of individuals in the Neutral camp has remained relatively stable and is gradually increasing. In 2019, the Neutral camp consistently outnumbered the Bullish and Bearish camps, indicating a long-term bias among the masses. This could be due to the political landscape, which may interfere with people’s ability to perceive reality accurately.

Until we have a feeding frenzy stage, this bull market will not end.

It’s important to remember that many factors influence the stock market, including economic data, geopolitical events, and investor sentiment. While the neutral sentiment of the masses may be a bullish indicator, it’s essential also to consider other factors that could impact the market.

Additionally, assuming that the masses will react with a “feeding frenzy” and then face a “sharp guillotine” is inaccurate. While market corrections and downturns can and do happen, predicting the timing and severity of such events is complicated and often unreliable.

Investors should approach the market with a long-term perspective and a well-diversified portfolio to mitigate risks and take advantage of potential opportunities.

Masses will eventually embrace this bull.

The number of individuals in the neutral camp has hardly budged over the past several weeks and is gently trending upwards. This indicates a long-term bias among the masses and shows that the political landscape messes with their ability to distinguish reality from fiction. However, this development is bullish as it means the market will eventually experience a “feeding frenzy stage.”

Contrarian players who mistake the initial surge in bullishness as a sign that the markets are ready to top out will end up shedding tears. The article recommends not adopting a position that opposes the masses until the crowd is in a state of ecstasy, and the bandwagon of joy should be ready to collapse before betting against the masses. As we are quite far from the “feeding frenzy stage,” the bull market is not ready to die.

This bull market is unlike any other; before 2009, one could have relied on extensive technical studies to more or less call the top of a market give or take a few months; after 2009, the game plan changed and 99% of these traders/experts failed to factor this into the equation. Technical analysis as a standalone tool would not work as well as it did before 2009 and in many cases would lead to a faulty conclusion. Long story short, there are still too many people pessimistic (experts, your average Joes and everything in between) and until they start to embrace this market, most pullbacks ranging from mild to wild will falsely be mistaken for the big one. Market Update Feb 28, 2019

Research

The Importance of Emotions in Investing: https://www.investopedia.com/articles/investing/021716/importance-emotions-investing.asp
Mass Psychology and the Stock Market: https://www.investopedia.com/articles/active-trading/052014/mass-psychology-and-stock-market.asp
Why Trying to Time the Market Is a Fool’s Errand: https://www.fool.com/investing/2018/05/10/why-trying-to-time-the-market-is-a-fools-errand.aspx

Investing For Dummies: Follow The Trend