The COVID crash of 2020 created the illusion that all corrections and crashes are easy to deal with. For example, Robin hood made it easy for everyone that was stuck at home to just log in and buy, and we had the meme trade boom, too; this all helped create an environment that made passive investors feel that just pressing buy was all there was to win in the stock market.
The current correction/crash will end, but it is more likely to take the path of the crash of 2008. Before we continue, the Russian Ukrainian war is not responsible for this severe pullback. The black swan event of the West imposing self-defeating sanctions turbocharged the supply chains issue. These sanctions are the sanctions from hell, for they affect those imposing the sanctions more than the Sanctioned nation.
While you might feel like panicking, remember we labelled the QE program that took off in 2009 and went ballistic in 2022 as Forever QE for a reason; it's never going to end. To give the illusion that the dollar is strong, the Fed will intervene and raise interest rates from time to time, as they did in 2018, to make it look like they are dealing with inflation, but then they will suddenly back off and throw 2 to 3x more money at the market.
Some signs that a lot of the speculators are getting battered come from the following headlines:
The Great Resignation, meet the Great Reset
https://finance.yahoo.com/news/great-re ... 17830.html
Day Trader Army Loses All the Money It Made in Meme-Stock Era
https://finance.yahoo.com/news/day-trad ... 36006.html
Cathie Wood's ARKK is worst-performing US equity fund in Q1 2022: Morningstar
https://finance.yahoo.com/news/cathie-w ... 20557.html
There are many other stories, but we will stop here; they all point to one fact: over 50% of those claiming to be passive investors were speculating in the same way the meme stock traders were. The only difference is that they gave their money to other people (money managers) to do the speculating for them.
The first story is the first signal that the labour market will ease? This will be bad news for workers as real inflation won't stop, but pressure on wages could start to drop a lot faster than many expect as there are going to be a lot of layoffs announced in the weeks, months and years to come. The real inflation we are referring to is the increase in the money supply, and it started the day we got off the Gold standard.
The idea behind this correction is to scare the masses so much that no one will question the Fed when they throw 8 to 10 trillion dollars into this market. Before COVID, everybody in the government was crying about infrastructure plans that would cost a trillion dollars and various other projects running in the billions. But when COVID struck, they had no problems approving 5 trillion, and nobody made any noise. Why? The living daylights were scared out of the masses. No one will make any noise when they throw 2X more and possibly 3X more to calm the chaos they created. And stocks will move in the only way they can, exploding upwards. While the carnage looks terrible now. When this market bottoms, expect many stocks to be trading up to 10X from their lows.
Under no circumstances should you fall for the Fed is going to raise rates for a long time story; they simply cannot and will not do that. The main reason is that the big players want to increase their current Net worth 10 to 20X more.
The worst crash in history, when viewed via a long term chart, would look like one of the best buying opportunities ever.
If you think the markets won't make a comeback, and this is it, you will be in for one helluva shock in the years to come. Many investors will view the highs of 2021 as a bargain in the coming years, so imagine what they will feel like knowing they could have accumulated shares at a much lower price during this punishing corrective phase. It happened at a much faster pace in 2020 and at a slower pace when the markets bottomed in 2009. The end result in both cases was mind-boggling returns for those that did not throw the towel in. The Melt-up will be of epic proportions because the Fed has no option but to inflate or die.
On a separate note, Silver which has done nothing big for years is getting close to triggering a very long term buy. When that buy is triggered Silver is likely to trade north of 55.00
