Down goes the Dow

I view these big one and two day rallies as phonies

Some good insight into the current monetary system:

themarket.ch

Russell Napier: The world will experience a capex boom

Mark Dittli

Market strategist and historian Russell Napier warns of a 15- to 20-year phase of structurally elevated inflation and financial repression. He shares his views on how investors should prepare for this new world.

Link:themarket.ch/interview/russell-napier-...

Market well up in prem opening trading again.

Insanity

I saw several wire houses coming out the last few days, predicting this rally...basic argument is that sentiment hit bottom, stocks were massively dumped. Basically called a capitulation bottom last week.

Meanwhile the market is already up 8% from its bottom just last week. Another example of how hard it is to buy a bottom. Markets move so quickly.

You don't think the market will be tanking again soon?

I do.

This is a fake rally like two weeks ago

I have no idea what the market will do for the next year. Only way to do this well is to look five years ahead and place bets accordingly.

As buffet says....if you buy a farm you aren't betting whether it will rain later that year....you are betting that over many years there will be adequate rain.

In the meantime I'm very happy to be getting 5%ish on my bonds. It's a new world. Although of course that will draw off hundreds of billions of dollars of stock market investments.

Amazing to think you can put together a portfolio that pays 5% from bonds and 3% from stocks. Leaving aside any possible capital gains.

Could be a heyday for 60/40 portfolios going forward.

Remember how you felt as the market tanked the past few weeks?

Easy money regime of last decade is broken. This is another bear market rally, pushed above 3,750 could go as high as 4,100. Fed policies and government fiscal irresponsibility created this volatility, continuing to sucker the naive. I will build maximum short position on any move higher.

“There are three principal phases of a bull market: the first is represented by reviving confidence in the future of business; the second is the response of stock prices to the known improvement in corporate earnings, and the third is the period when speculation is rampant – a period when stocks are advanced on hopes and expectations. There are three principal phases of a bear market: the first represents the abandonment of the hopes upon which stocks were purchased at inflated prices; the second reflects selling due to decreased business and earnings, and the third is caused by distress selling of sound securities, regardless of their value, by those who must find a cash market for at least a portion of their assets.
– Robert Rhea, The Dow Theory, 1932

“The “completion” of a market cycle involves the repricing of valuations from rich or extreme levels that imply poor or dismal long-term expected returns – to run-of-the-mill or depressed lows that imply reasonable or outstanding long-term returns. In my view, the market losses that we have observed during 2022 to-date represent what Robert Rhea described in 1932 as the “first principal phase” of such a retreat – “the abandonment of hopes upon which stocks were priced at inflated prices” – in this case, the abandonment of the notion that the Federal Reserve could forever hold interest rates at zero without consequence. We have not yet observed “selling due to decreased business and earnings,” much less “distress selling of sound securities, regardless of their value.”

-John Hussman, October 2022 Market Commentary

Sounds like Hussman hasn’t been paying attention. No surprise there.

Buffet talking about buying the farm, that certainly rings true for me, in a metaphorical sense rather than literal...

So, hoping you are right,

My skill at the short term trades in response to the immediate fluctuations have been admittedly horrible. Hopefully I am positioning myself for better results in the long term, which would be no small accomplishment, actually.

Even today's fluctuation was rather surprising and erratic.

Very very twitchy market…with the vix this high it’s like an open wound…the slightest touch can really hurt. It will settle down eventually…likely after earnings season and midterms.

after hours Netflix up 13% - the rally may continue. Certainly a lot of puts out there that have to be neutralized by buying.

Need a nice market tank today to counter Monday's big run up

Everyone else, besides Igy, is rooting for a soaring market today.

Not quite true. I'm not banking on a crash (very little market exposure at the moment), but would selfishly love to see one as that would represent a generational buying opportunity that would set us up to be fat and happy in retirement with no risk to end up eating cat food under a bridge somewhere...

10 year yields zooming to new highs this morning...stocks cannot rise when yields are rising quickly

10 year is 4.11% now

a month ago it was just 3.49%

We'll quickly go back to new lows in the SP500 if yields keep rising like this

and they might...published inflation numbers are now expected to get worse the next month or two, not better.

Seeing as how my biggest holding are ETFs betting against the market, can you think of any reason I would root for a tanking market?

I would actually cheer a market rally so I can reload my shorts.:-)

Saw this tweet recently from Nassim Taleb.

"Finance has three simple rules: maintain a clear mind, figure out asymmetries, never talk to idiots."

Just kidding, besides Maser said Taleb was over rated ( or something to that effect ).