October Stock Market Crash Update

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October Stock Market Crash Update

Updated March 2020

October Stock Market Crash

It takes no effort to panic and that is why there is no reward, but it takes effort to remain calm in the face of panic and that is why the rewards are usually very high.  Mass Psychology has a very clear stance on this position; stock market crashes are nothing but long term buying opportunities, for the masses always sell at the bottom and buy at the top. They are the perfect cannon fodder candidates; nothing has changed and nothing will change for the next millennia

Overall we expect volatility levels to remain high, so expect swings in both directions ranging from mild to possibly wild and we would not be surprised if many parts of the world experience weather patterns bordering on the insane in the weeks to come. Wild weather is usually followed by insane human behaviour. Hopefully, we are wrong as when it comes to wild weather we are only too happy to be proven wrong as it brings untold pain and misery to many.
On the political frontier, the situation is going to continue trending towards the insane and by 2020, any sane person is going to think that they need some strong medicine to follow what the candidates really have to offer. So far the scene has all the makings of a D rated movie

The following excerpt was taken out of the July 31 st 2019 Market Update (our top premium service), so while there is always the chance the market could crash in September or October, this crash/correction has to be viewed as buying opportunity.

If the market pulls back, it’s a bonus, and this is why we also adopt the stance that when the trend is up; the stronger the deviation, the better the opportunity.  Strong pullbacks should be viewed as early Christmas bonuses as the trend is firmly up. Sharp pullbacks can be used to open or add to one’s current positions.  Market Update July 24, 2019

If yesterday’s pullback gains traction, then embrace, for it will prove to be a buying opportunity.  The best time to buy is when the trend is up, and one feels uncertainty creeping in and vice versa.  When one is sure that everything is fine and the markets are destined to trend higher, then it is more likely that the opposite will come to pass.

The Dow has now dipped below 27K (on a monthly basis), and in doing so there is a good chance that one of the two outcomes we favour may come to pass:

  • The Dow drops hard and fast to the 25,500 to 26,000 ranges, the crowd stampedes and in the process, the masses create a lovely long term opportunity for Tactical Investors
  • The market pullback a bit and then trends sideways and in doing so pushes our indicators into the oversold ranges.   Market Update July 31st, 2019 

Random thoughts

  One needs to understand that it takes time to get used to the principles of mass psychology as it disregards many of the so-called laws of financial wisdom, most of which, if one is truthful, would fall under the category of rubbish.

 The only real law that applies when it comes to the financial market is that there is no law. We are dealing with emotions and when emotions run amok, all hell breaks loose, that is why like cattle, the masses always stampede when the markets sell-off and all of them jump in when the bubble is about to pop. Hundreds of years have passed since the Tulip bubble and nothing has changed.

October Stock Market Crash Update

The markets are volatile (Sept to Oct 2019) and the crowd tends to overreact to the news. Remember, every disaster becomes a disaster because the masses were conned into believing a false narrative. You say no way; well then how come reacting to disasters pays so poorly.  The stock market is the best barometer for the disaster-prone. If disasters paid off well, then the Dow should be closer to zero than 27K.

It takes zero effort to panic and the reward is exactly zero; those that panic in the face of adversity are given what they deserve. In terms of the market that means less than zero, as the masses always sell at the bottom and buy at the top. The astute individual that does not panic walks away with a huge reward and that is how it’s been for millennia and nothing is going to change for another 1000 years.

Stock Market Update March 2020

While it feels like the end of the world, such corrections always end with a massive reversal.  Given the current overreaction to the coronavirus, there is now a 70% probability that when the Dow bottoms and reverses course; it could tack on 2200 to 3600 points within ten days. Interim update March 9, 2020

The 1987 crash and 2008 crash fell into the category of the “mother of all buying opportunities“, Hence focus on the big picture as another mother of all buying opportunities could be in the making. Instead of panicking and fleeing for the hills, make a list of stocks you would love to own over the next 3 years. Armed with this list, start buying like there is no tomorrow, for when tomorrow comes you will be smiling, unlike the masses who will beat themselves forever, for missing such an opportunity.

In Feb of 2019, the crowd would have given anything to be able to buy stocks at these prices but now they scream in fear.  What has changed? Nothing other than mass hysteria over an event that will kill fewer people than the flu does every year.

The  Fed has dropped rates by 150 basis points in two weeks.  When was the last time the Fed took such an action? This is unprecedented and indicates that the Fed is willing to throw the kitchen sink at this market.

After this mass hysteria phase subsides, it will lead one of the largest feeding frenzy stages of all time.

Combine zero rates, over two trillion dollars worth of money created from thin air by the Feds;  a market melting upwards is going to be the end result. Almost zero rates will force a huge number of individuals to speculate or starve and these retired individuals have a lot of cash sitting in money market funds.

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