What should traders have learned from the Nov-Dec 2018 crash?
There is only one answer really; fear pays poorly. We sent out an inordinate amount of updates during the crash phase, as we did through every crash like phase the market has experienced over the past several years. The reason we did this, was to prove in real time that giving into fear is a waste of time, money and good health. Once again the so-called crash of 2018 will have to be labelled as the crash that never was.
One day the market will experience something that will fall under the “crash” category that all the experts have been warning since the inception of this bull. For that to occur, bullish sentiment will have to soar to the extreme ranges and remain in that zone for an extended period.
This Stock Market Bull is unlike other bulls
Long before this pullback, we stated that this bull market would soar to heights that would surprise even the most ardent of bulls, and that prediction has mostly come to pass. Some of the most ardent of bulls started to keel over as early as 2016, and the last strong correction virtually knocked all of them out. So where did they err? Over-reliance on old systems; the paradigm has changed, the players have changed, and as a result, the perceptions have changed. When it comes to the markets; the main driving force is emotions (perceptions); everything else on its top day is secondary at best.
Media Lies To The Masses; Trying To Convince Them That Nothing has changed
This bull market is unlike any other; before 2009, one could have relied on extensive technical studies to more or less call the top of a market give or take a few months; after 2009, the game plan changed and 99% of these traders/experts failed to factor this into the equation. Technical analysis as a standalone tool would not work as well as did before 2009 and in many cases would lead to a faulty conclusion. Long story short, there are still too many people pessimistic (experts, your average Joes and everything in between) and until they start to embrace this market, most pullbacks ranging from mild to wild will falsely be mistaken for the big one.
The results speak for themselves; the majority of our holdings were in the red during the pullback, but now they are in the black, proving that one should buy when there is blood flowing in the streets. It is a catchy and easy phrase to spit out but very hard to implement, because when push comes to shove, the masses will opt for being shoved.
V readings are still at ultra-high levels
We have alluded to the fact that there is a pattern between extreme weather and market action. Extreme weather usually pushes many people to act in wildly unpredictable ways. Look at animals when there is a sign of impending danger they act strangely, humans are not that different. The only real difference is that humans are not aware of this and tend to blame other factors for this irrational behaviour; this behaviour is reflected in and out of the markets. Violent crimes and or bizarre crimes usually surge during these periods. However, one of the best places to see this type of action is in the markets and the action over the past three months is clear evidence of this.
We have spotted what could turn out to be a new trend between the V-indicator and the Trend Indicator. Our hypothesis:
“Higher (V-Readings) readings, are more likely to ensure that the least probable outcome will come to pass in regards to the markets.”
For example, the least probable outcome from Dec 2018 to Jan 2019 was for the markets to mount a strong rally, but that is precisely what took place. This pattern, if it continues, will provide another level (secondary) of confirmation that this bull market is destined to trend a lot higher than the most ardent of bulls could ever dream of.
Follow the trend for it is your friend, the rest is just hot air and noise
Courtesy of Tactical Investor
Random views on Popular Media Lies
Forget fake news, investors should realize the markets are fake, says asset manager
The global rally in financial markets is unsustainable because it only seems to respond to changes in the real economy when it fits a certain narrative, according to the CIO of investment firm Fasanara Capital.
“I call it fake markets… you know, these days they talk about fake news (but) these are fake markets in a way right?” Francesco Filia, CIO of Fasanara Capital, told CNBC on Wednesday.
Filia argued financial markets had become “complacent” and “insensitive” to fundamental changes in the economy. He suggested while markets appeared to surge higher on so-called good data, a mirrored response lower on negative sentiment had not been evident.
“I think this kind of market environment is both unstable and unsustainable… at some point, something is going to happen that is going to all of a sudden wake up markets as to this overvaluation,” Filia said.
European bourses were trading lower on Wednesday after European Central Bank President Mario Draghi appeared to hint the ECB would be prepared to scale back its monetary policy amid improving economic prospects for Europe.
Meanwhile, in the U.S., the broader S&P 500 index posted its biggest one-day drop in about six weeks overnight and closed at its lowest point since the end of May. Wall Street’s losses appeared to accelerate on news that the U.S. Senate had delayed voting on a health care reform bill. Full Story
Why robot traders haven’t replaced all the humans at the New York Stock Exchange—yet?
As in so many other industries, robots have been marching into Wall Street for years. That’s especially the case in stock trading, where algorithms now do the majority of buying and selling. Instead of a boisterous trading floor, these days many US equity transactions happen in a data center in suburban New Jersey. One place where human traders are safe, though, is the New York Stock Exchange, which has roots going back two centuries. The stock exchange has made sure its human presence is protected, for now.
NYSE’s several hundred traders and brokers are the face Wall Street, and form a crucial part of the NYSE brand, which is perhaps the best known in the financial industry. The stock exchange packs a marketing punch few, if any, businesses can match. But given that computers dominate stock trading just about everywhere else around the world—and play a pretty big role at NYSE, too—it’s reasonable to ask whether the people milling around the trading floor at 11 Wall Street in Manhattan are worth keeping around. Critics argue that it’s a façade for television cameras, a kind of capitalist Disneyland.
“If you were going to start from scratch, trading would be fully automated,” said Larry Tabb, founder of research and consulting firm Tabb Group. ”That said, I think the human role does provide assistance in trading.” Full Story
With seemingly everyone from the blogosphere to the Tweeter-in-chief chiming in on fake news, have investors considered their risk/return profile may also be “fake”? When it comes to investing, who or what can we trust, is the market rigged, and why does it matter?
For eight years in a row now, an investment in the S&P 500 has yielded positive returns. In recent years, expressions like “investors buy the dips” and “low volatility” have become associated with this rally.
In the “old days”, investors used to construct portfolios that, at least in theory, provided a risk/return profile that they were comfortable with. For better or worse, I allege those “old days” are over. To be prepared for what’s ahead, let’s debunk some myths.
The system is rigged
For those that say the system is rigged, I concur. In my assessment, central banks are largely responsible for a compression of “risk premia.” All else equal, quantitative easing and its variants around the globe have made assets from equities to bonds appear less risky than they are. This is at the very core of central banks efforts to entice investors to take risks, as risk taking is key to making an economy grow. In practice, central banks have foremost pushed up financial assets, but have largely disappointed in generating real investments. As a result, those holding financial assets have disproportionally benefited. Full Story
The Temporal Tapestry: Unraveling Present Bias Psychology in Modern Investment Decisions Present bias psychology, a cognitive tendency that leads individuals ...
The International Monetary Fund (IMF) says the global economic outlook is "brightening," but warns that "protectionism" and geopolitical tensions could ...
Fiat Money: The mother of all evils is fiat. Without Fiat, none of the above developments would have taken off. As money can be created out of thin air, those in the know have unlimited mechanisms to increase their wealth easily. The devastating boom and bust cycles the markets experience are not natural; they are created. Each cycle is pushed to the MAX in order to create more of an opportunity for those in the know how. Now if you control the money, you can purchase all the main media outlets. When you control the media and the money supply you are king of the hill; less than 10% of the populace is strong enough to resist from falling for what they have directed to see.
The left and the right are being directed;
They are both being played, and none is the wiser. This technique is used everywhere. The strategy employed is to provide the masses with two to three options to give them the illusion of choice but all the choices lead to the same outcome, and that is what they fail to see. When one takes an extreme position it does not matter whether you are swinging to the right or to the left, you are being controlled and it’s impossible for that person to see anything else besides the data they have been fed.
So how does this all tie up; all those events we briefly mentioned are being used and will be used to polarise the crowd even more? What is immoral today is moral tomorrow; what changed? The only thing that changed was the perception. So if you program children young enough with the perception you want, you can make them accept almost anything as moral, and that is what the public education system is all about. Remember nothing is free and what appears to be free usually ends up costing you 10X more down the line. One wise man I knew would often use this sentence when anyone made references to free stuff. He would say I am not rich enough to accept free things.
Fiat Money is behind everything
As Fiat is behind everything, and the money supply continues to go ballistic, we can expect levels of polarisation to soar to levels that are unimaginable today. With an unlimited supply of money and a vast understanding of the topic of Mass psychology, there is almost nothing in place to stop the top players from pushing these trends to their limit. The only defence is not to allow your emotions to do the talking, sit down and imagine its reality TV minus the Boob tube.
We have gone on record for several years on end, stating that market crashes are nothing but buying opportunities and today we provided a brief glimpse into the reasoning behind this stance. There is no way the Fed is going to allow the markets to crash and burn. They will create the illusion of a crash, and the masses will react in the way they have been programmed to react; dump the baby with the bathwater. The conniving top players will come in and scoop everything. What separates a correction from a crash? Your entry point; the early bird gets the worm, and the late bird has to contend with the bullet. That is why mass psychology states that one should sell when the masses are euphoric and buy when the masses are panicking or in a state of uncertainty.
Take a look at these charts, and a pattern will start to emerge
The shaded areas represent recessions, and a recession usually follows a disaster. After each recession, the currency in circulation continued to soar.
The same thing occurred with M1 money stock, and after each recession, the M1 money stock surged even more. Look at the spike after the 2008 financial crisis.
Moreover, the same can be said of the monetary base, but the move in this chart was explosive after 2008.
In 1790 the national debt was a minuscule $75.4 million, and today we add more than that on a monthly basis. So when experts especially from the “hard money camp” state that the masses will revolt one day. The only part that is true in that sentence is “one day” but that day could be decades away from today because their perception has been altered. They believe that the dollar is good as gold and as long as they believe that, Fiat has no chance of being unseated and nothing is standing in the way of the national debt moving to $100 trillion. If it could move from $75.4 million to almost $21 trillion without the masses revolting; the move from $20 trillion to $100 trillion is paltry by comparison
So what stands out is that the principles of Pavlov have been used wonderfully against the American and now the world populace at large. The masses have accepted that if there is a crisis, the government will find a way to solve it. Indeed they will find a way, but they will pass the bill onto the unsuspecting masses in the form of inflation and taxes; double whammy for inflation is a silent tax.
Therefore we can make the following conclusions
Nations will continue to take on more debt; the US will lead the pack. In order to do this without interference from the masses, disasters and divisions will have to be created. Remember the saying conquer and divide or united we stand but divided we fall. The only ones falling will be the masses. History indicates that the ones that are least able to pay always pay for the lion’s share and they do so for the disasters created by the very people that are sending them the bill. There are no free meals, just illusions of free meals.
If the above premise is correct, then the next conclusion is that the governments will never allow a repeat of the great depression. Today’s society will never accept hardships like that; they will string the people in charge of the nearest tree, but this is precisely the mindset the top players fostered. For in the guise of helping the masses than can fleece the living daylights out of them. Ultimately this informs us that every market crash no matter how bad or strong will prove to be a buying opportunity for it gives these players an excuse to ramp up the money supply
A disaster needs to be manufactured in order to provide the masses with a solution
You can only provide the masses with a solution if you manufacture a disaster that appears to be so terrible that the masses will accept conditions they would not have accepted before the disaster because they have been led to believe the aftermath will be infinitely worse. It is a win-win situation for the top players; they get their cake and their pie. This is why we do not fear stock market crashes because we understand the game plan and we know that the masses will always be used as cannon fodder.
Having said that, jumping and buying stocks when the markets are crashing is not an easy thing to do. We spent over a decade in coming out with the trend indicator, and we have our custom indicators to inform us of when a trend change is close at hand or when the markets are exhibiting definite signs of a bottom.
What are the average player’s options?
Take time to understand the main principles of Mass Psychology as without that you will give in to fear every time the market’s pullback strongly. Understand that our first reaction is to flee when confronted with any danger, don’t fight that feeling, study it and understand it for it is. When you study it, you will come to see how bad such emotions are and in doing so, you will have moved to the stage where you will have the power to say yes or no when exposed to a similar situation. Read history books; you do not have to learn from your experiences only; you can learn by studying the reactions of other people
Once you have mastered that, find 2-3 technical indicators that appeal to you. They must appeal to you; don’t just choose them because they sound fancy or they are promoted as being the best ones out there. Once you find some appealing technical indicators, study them and look for patterns. Technical analysis is like art; beauty is in the eye of the beholder. Use long-term charts preferably weekly and monthly charts.
Courtesy of Tactical Investor
Random views on FIAT money
Boom and Bust Cycles Are Primarily Due To Fiat Money
Make the Masses focus on other factors so they don’t focus on the Fiat Money Factor
The ploy from the day we got of the Gold Standard has been to redirect the masses attention. The masses are directed to focus on they could buy with all this money. In other words, Fiat money appears to be incredibly valuable, even though it has no intrinsic value.
To cement this illusion, a small segment of the population is paid fantastic salaries and their flamboyant lifestyles are broadcasted for everyone to see. The goal of creating divisions in society is to make one group of individuals wish for the lifestyle that this other group is living. The more divisions you create, the greater the cover; in other words, these divisions are created to ensure that the masses forget the real task at hand. This has worked very well, for almost no one today questions Fiat. Their main agenda today is to make more money so that they can lead a better life; little attention is paid to the fact, that they have to work harder and harder for less and less. The money they are paid is constantly being diluted; this is the true defintion of inflation. An increase in the money supply and not an increase in prices. Rising prices are only the symptom of the disease. Full Story
World FIAT Currencies List
Unlike commodity money which is covered by the value of the precious metal it was created from, usually silver or gold, the value of fiat currency is dependent on the interaction between demand and supply forces. The parties, buyer, and seller, engaged in its exchange will come to an agreement on its value.
Fiat is a Latin word. Translated into English, fiat means “Let it be done”. Fiat Currency is money that does not have intrinsic value but is recognized or accepted as a form of legal tender through government regulation. To read more about fiat currencies click on the following links to jump to the correct sections:
While most money was backed by physical goods or precious metals, fiat currency is contingent on people’s belief and faith in a country’s economy.
Many of today’s paper money is considered fiat money. They do not carry user value. The function of the paper money is to facilitate a payment. A government would produce coins out of precious metals and manufacture paper currency that would have an equivalent value in terms of a physical good. In the case of fiat currency, it cannot be redeemed. Neither can fiat currency be converted.
Fiat currency because popular and widely used in the 20th century particularly during the period of 1968 and 1973 when the Bretton Woods Agreement was terminated and the United States no longer allowed the U.S. Dollar to be converted to gold. Full Story
Billionaire Tim Draper: Only Criminals Will Use Fiat Money, As Cryptos Will Hit Mainstream in Next Few Years
Legendary billionaire venture capitalist, Tim Draper has predicted that in the next five years, fiat currencies will only be used by those involved in illicit activities.
According to the well-known bitcoin (BTC) bull, cryptocurrencies will achieve mainstream adoption within the next few years – while fiat money will mostly be used by criminals. Draper’s comments came during an interview (on February 18th) with Fox Business in which he told the financial news outlet that cryptocurrency transactions can be tracked easily through block explorers.
Draper, who acquired 30,000 bitcoins during a US Marshals Service auction (after they had been seized from Silk Road’s black markets), remarked:
“The criminals will still want to operate with cash, because they catch everybody who is trying to use Bitcoin.”
Last year in August, an agent working for the US Drug Enforcement Administration (DEA) had said that it was easier for her department to monitor cryptocurrency transactions – when compared to illegal deals conducted using fiat money. The agent had explained that block explorers provide advanced tools which allow government agencies to accurately track crypto transactions on the blockchain.
During his latest interview, Draper also mentioned that he thinks the fiat money in his bank account is not as secure as his cryptocurrency holdings. According to the business tycoon:
“My bank is constantly under a hack attack.”
The Temporal Tapestry: Unraveling Present Bias Psychology in Modern Investment Decisions Present bias psychology, a cognitive tendency that leads individuals ...
The International Monetary Fund (IMF) says the global economic outlook is "brightening," but warns that "protectionism" and geopolitical tensions could ...
