Bull Bear Traders-Long Term Stock Market Bears Always Lose

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Bull Bear Traders

Bull Bear Traders

There is no such thing as Bull Bear traders but a hybrid mix like this would create one of the best types of trader mindsets out there. Such a trader would not be limited to seeing only half the equation but would look at the whole picture.  However, there is an even better option; the trend trader.  A trend player looks for the next emerging trend and then look for the best stocks in that sector. The idea is to play the trend in its entirety. in order to do that you have to understand Mass psychology. 

Do Stock market Bears have valid arguments?

Yes, they do to some degree; 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.

Bear markets equate to opportunity

bull Bear markets equate to opportunity

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.

Perceptions are dangerous as they make you see things that might not really be there

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

Focus on the Trend &  Ignore Bull Bear market Hype

Focus on the Trend &  Ignore Bull Bear market Hype

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

April 2018  Comments on Bull Bear Markets

 April 2018  Comments on Bull Bear Markets

The markets are today are putting in patterns that match those of 2003 and 2009.  In other words, the patterns are more indicative of bottoming action the topping action simply because, for the most part of this bull run, the markets were hated.

Investors did not want to allocate money to this market, so in, some ways, this could be viewed as the 1st leg of the Bull Run that the masses will eventually embrace.   At this stage of the game, we would not be worrying about a bear market for market sentiment is still too negative and there many positive factors one of which is the massive Tax cuts that will provide the energy for this market to run higher.  Secondly, even though the Fed has decided to raise rates; interest rates are at historically low levels and they would have to rise significantly before they have any impact on this market.

Lastly and most importantly, the trend as per our trend indicator is still positive and so that means every pullback has to be embraced regardless of the intensity.

Final thought, most bears and bulls are arrogant, they both usually overstay their welcome. In our opinion, if the markets are getting ready to put in a top, then a small amount of money should be put aside to purchase puts.   The main effort should be directed to building a list of top quality stocks that you can jump into when the markets start to crash

Inflation does not seem to be an issue

 

Shadowstats provides quite good data when it comes to inflation and the money supply and even their data seems to confirm that for now, inflation is a non-event.

 

 

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