Rising bearish sentiment and a market trading at new highs (at least the Nasdaq is) don’t go hand in hand. It is interesting that no one talks about this development. They keep stating that this market has risen too fast and that stocks are due for a sharp correction, yet, AI stocks pullback ½ step and advance 2 ½. Value investing is dead, as no one cares about value stocks; however, there are a few exceptions, and one such exception is the banking sector, where many bank stocks are selling at below book value. Banks work hand and glove with the Fed, so while some might fail, the majority will survive and continue to thrive. Soon they will be encouraged to use their funds for trading activities; the excuse will be well; they can’t earn enough due to low-interest rates and then watch their profits take off. For now, this development is falsely being labelled as Stock market euphoria; the problem is that most individuals would rather not speculate but with ultra-low rates, they can either speculate or get fried
Stock market euphoria will become a factor only when the masses embrace this bull
However, back to the concept of value investing; for the most part, today’s investors don’t give a damn about value investing; this includes both the young and the old. Individuals are looking for investments that can yield high returns but also ones that offer the potential for something new; in other words, technologies and or services that improve their lives. In simple terms, we are in the World of Tik Tok investors; the concept here is simple chase your dreams and hope you don’t wake up to a nightmare. As the silent majority is still sitting on the side-lines, the ones that are putting this strategy into play, without knowing it, fall into the contrarian camp as they are going against the neutral players that are basing their investment decisions on old school logic. However, as these chaps are not contrarian players, eventually most of them will head for the chopping block.
Back to the sentiment factor; how come not even one expert has noticed this anomaly? One reason could be that they are stuck in their old ways and this validates the argument we recently made, that states many big players will be reduced to dust as they refuse to adapt and adjust to the changing environment. The mass mindset is refusing to embrace this market as indicated by the high bearish readings, which leads to one conclusion only; this market is going to soar to unimaginable heights, but in between, there are going to be some wild rides. Ingrain this in your mind; this is the “Market of disorder”. Its function is to throw everyone off because 90% of the populace either focuses on the tree or the forest. Very few players understand that both are important. Only if one can view the situation from multiple angles, will one have any hope of understanding this market today and 60 months from today?
Until Bullish sentiment soars north of 60, Stock market euphoria is a non-event
A market of disorder means that even we will have problems identifying the short to intermediate-term trends. The main function of such a market is to create the illusion that the short term and intermediate trends will determine the long-term trends. Yes, you heard us correctly, we anticipate that we will have issues identifying the shorter-term trends. We have also stated that we are not experts or masters; experts know nothing and masters are just bad students that decided to give up. We, on the other hand, consider ourselves to be advanced students; this means we are ready to adapt and learn new methodologies. We don’t take anything for granted. The good news is that the short to intermediate-term trend does not determine the long-term direction. So, while we might run into some issues on the short-term timelines, we don’t fear the same outcome when it comes to examining the long-term trend. Why would we admit such a matter; why not just keep quiet about it? Well, for one, our subscribers are not stupid, and by playing dumb, it would be an act of disservice. And going forward, most financial services that don’t treat their customers with the respect they deserve will pay a very steep price for their arrogance. However, more importantly, it illustrates our willingness to embrace new concepts and our desire to adapt to changing market conditions.
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