On the same token, the reason so many Magellan fund subscribers lost was that they were trying to outdo Lynch. They sold when the going got tough and purchased the fund when everything looked rosy; the perfect recipe for destruction. Market Update Sept 20, 2020
Create an image of the sentence above in your mind, and you will notice like clockwork, that the masses do precisely the wrong thing at precisely the right time. They follow this mantra with such perfection that it’s almost impressive; they never stop to ask the following question. What if we did the opposite? Even if they attempted this once only, their eyes would open to a world of new opportunities, but because they remain ingrained in their belief that one should panic the moment danger rears its head, nothing will ever change.
So, what can we gather from this? That no matter how good the fund managers are, stupidity trumps logic. Investors allow emotions to enter into the equation; the decision to buy is based on greed, and the decision to sell is based on fear. In essence, the odds of winning when employing such a strategy is virtually zero. Market Update Sept 20, 2020
Stock Market Trends 2020; Stupidity Trumps logic
Note that this danger the crowd creates is based on a set of false perceptions. False perceptions are based on a set of false filters. Hence with false filters and twisted perceptions, one is creating a reality that does not exist, and in doing so, one has no hope of upgrading one’s operating system. Note that we all have operating systems to a degree. These operating systems determine how you process the data you take in; this is why one person can see opportunity while the other can only visualise danger. And this is where the saying beauty is in the eye of the beholder originates. More on this in future updates, but we will also post two new books. One today and one in the next update that should help provide some illumination on this topic.
Stock Market Trends 2020, supported by Mass Sentiment
The market of disorder rears its head again; the gauge on the anxiety index is back into the madness area, and under any circumstance, this would be viewed as madness. The markets have recouped the bulk of their losses, the Nasdaq and the SPX soared to new highs, and the crowd is as hysterical as it was during the coronavirus sell-off. On the surface, it appears that bearish sentiment has dropped, albeit slightly and that individuals are somewhat less bearish. Take a closer look; the bears jumped into the neutral camp as neutral readings went up from 27 to 29.
We have a real version of musical chairs being played; only in this instance, the wrong move could cost one a fortune. Neutral readings have more or less remained constant since the markets bottomed. What is worse than fear? Uncertainty. At least when you are fearful, you have something to focus on. When you are uncertain; you are like a Yo-Yo swinging from one side of the fence to the other. The longer the crowd remains sceptical, the higher this market will run. If we had to make what is sometimes referred to as an educated guess, it is all but certain that the Nasdaq will trade to and past 15K
The monthly chart of the SP500
In all the major indices, the weekly charts are temporarily exerting a stronger influence. From an investment perspective, it is usually a very bullish development when the weekly charts exert more influence than the monthly charts because the markets are deviating from the norm. History and Mass psychology clearly illustrate that the stronger the deviation from the norm, the better the opportunity. The short term outlook will remain decidedly bullish if the SPX does not close below 3198 on a weekly basis. If it does close below this level, then a test of the 3000 ranges is possible, which will create a lovely long term opportunity. The long term outlook remains bullish.
Thus, even though the short term action might be nerve jarring on occasion; if you are new to the Tactical Investor, resist the urge to panic and follow the trend. What do you have to lose trying something new? Doing the same old thing has never produced significant results, and mainstream media has brainwashed the crowd into viewing strong corrections and the so-called crashes as disaster type events. When on every single occasion, a financial disaster proved to be a buying opportunity. Now back in the old days, the Fed was less aggressive, so the opportunity took longer to manifest. The Fed is currently operating in “maximum overdrive” mode; in such an environment, it’s futile to resist. There are two ways they will achieve this; one is via conning the masses; the other is via pressure. The pressure directive is simple, do as your told or we will destroy you. Even at this stage of the game, the Gold bugs have not figured out the con. Despite Gold soaring to new highs, when priced in today’s dollars (minus all the fake inflation data), Gold would have to roughly be trading in the 2900 to 3300 ranges to equate the highs it put back in 2011.
While Bitcoin, one of the digital Fiats that has the backing of the Fed has traded as high as 20K, a feat gold will almost never achieve in the foreseeable future. While the Fed pretends it is attacking crypto’s it’s a ploy to make, people embrace it even more. They attack crypto’s just enough to give the impression that they want to destroy them, but the attack is never as hard as the attacks they have mounted against the precious metals sector. And regardless of whatever gold bug experts come out at state, the hard money community and the Gold bug community will never beat them. The reason is simple; they don’t have the numbers and or support of the masses. If you want to bring about change, the first thing you have to do is convince the masses. Notice the Word Convince has to parts, and the Major part to focus on is CON, once you con them, you make them vince, and it’s game over. Cryptos are being embraced at a rate that is 4X to 6X faster than Gold was ever embraced; at this rate, the critical threshold point of 65% will be breached sooner than most expect. When 65% of the crowd embraces cryptos, the Fed will start to make plans on taking over this sector.
If the Dow closes below 27,000 on a weekly basis, then a test of the 26,300 to 26,470 ranges is likely. There is no reason to panic for the trend is positive; hence, whether we like it or not, as Tactical Investors, we have to embrace these pullbacks and dare to do attempt the unimaginable. Celebrate in the face carnage for the separating factor between disaster and opportunity are perceptions. Market Update Sept 20, 2020
The Dow traded below 26,500 (roughly to 26,480) trading with the upper suggested ranges after it breached 27,000. However, it recouped those losses rapidly because it did not end the week below 27,000. If it closes below 27,000 on a weekly basis, then a test of the 26,300 ranges can be expected with a possible overshoot to 26,000.
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