Investing General Discussion

Zog said:

Im not even speculating on if its a crash or not just saying, the fed isn't going to rethink raising rates just because the nasdaq dropped 6% or whatever it ended up being at the end of the day.

We would need a black swan event and peoples retirements getting wiped out before they would even entertain this idea.

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I bet you think markets struggle in a rising rate environment. Do some homework and stop reading garbage.

Sanrith Descartes said:

That's why I brought it up.

I have mention before when the narrative is going up this thread doesn't get a lot of traffic besides the few regulars. When it starts correcting though, we need a doorman to keep the traffic moving smoothly.

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This is very true, and I try to post more during these periods to be helpful because navigating tough times like this is really where investor underperform. So rather than be snarky to Zog I'll try to be helpful. (Avoiding snark is hard just hearing the same nonsense for decades)

So here is a daily chart of the SPX (bonus points if you can recognize when this was without looking it up). This is a 19 month period in which the market was on a steep ascent. To have in full perspective this run does NOT start off some bear market low, in fact the market is up 100s of % before this chart even starts in fact the market was on a 13yr expansion prior to the start of this chart. Now if you look in the upper right you can see a very steep sell off that solidly pierces the 200 day moving average. Now if you really squint you can see the Titan_Atlas's of the world posting that bulls are done and the markets are phucked.



So what happens next? The market has erased 7 months of gains. Well this is what happens next.


That's another massive two years of trend resumption. With the Fed raising rates. But the bears would have their revenge because this then happens (just expanding chart to the right 4 months more. We see absolute carnage. Big loss of 200d again a rally that can't take it back and things look BAD.

So what happens next? Well just a little 50% rally in only 15 months


Now I understand I could show negative outcomes. People don't need help being pessimistic. We are great at envisioning doom and gloom, the thing people usually lose sight of is the possibility of greater than expected outcomes in the middle of a decline. Strong trends are not to be underestimated. They can be incredibly resilient, we have to keep our ear to the rail to really understand the warnings signs of large secular trend changes and understand declines to be sold and declines to be bought.

If you find yourself with a raging bear boner load up HYG or JNK right now and ponder why junk bonds where green today. Then go back in history and find declines to be sold where credit spreads weren't blowing out. I'll wait....

Kiroy said:

god damn if this doesn't make me feel better

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actually why I post it. Declines are part of the game.

Blazin said:

This is very true, and I try to post more during these periods to be helpful because navigating tough times like this is really where investor underperform. So rather than be snarky to Zog I'll try to be helpful. (Avoiding snark is hard just hearing the same nonsense for decades)

So here is a daily chart of the SPX (bonus points if you can recognize when this was without looking it up). This is a 19 month period in which the market was on a steep ascent. To have in full perspective this run does NOT start off some bear market low, in fact the market is up 100s of % before this chart even starts in fact the market was on a 13yr expansion prior to the start of this chart. Now if you look in the upper right you can see a very steep sell off that solidly pierces the 200 day moving average. Now if you really squint you can see the Titan_Atlas's of the world posting that bulls are done and the markets are phucked.

View attachment 394126

So what happens next? The market has erased 7 months of gains. Well this is what happens next.
View attachment 394127

That's another massive two years of trend resumption. With the Fed raising rates. But the bears would have their revenge because this then happens (just expanding chart to the right 4 months more. We see absolute carnage. Big loss of 200d again a rally that can't take it back and things look BAD.
View attachment 394128
So what happens next? Well just a little 50% rally in only 15 months
View attachment 394129

Now I understand I could show negative outcomes. People don't need help being pessimistic. We are great at envisioning doom and gloom, the thing people usually lose sight of is the possibility of greater than expected outcomes in the middle of a decline. Strong trends are not to be underestimated. They can be incredibly resilient, we have to keep our ear to the rail to really understand the warnings signs of large secular trend changes and understand declines to be sold and declines to be bought.

If you find yourself with a raging bear boner load up HYG or JNK right now and ponder why junk bonds where green today. Then go back in history and find declines to be sold where credit spreads weren't blowing out. I'll wait....

Click to expand...

One follow up to this, the last chart is the final run before a devastating bear market. Now it's logical to ask how we can discern that decline from the previous two. Now look at the charts do the rallies look the same? The final rally is notably weaker in trend. It's a big gain but the volatility increased the market struggled to consistently stay above the 200d closing below it multiple times. This is a trend waning. Now look at today and compare the last 20 months to these three rallies which chart does it look more similar to?

This chart is the next period following the last run up.


Even more volatility , look at the mess of the 20d and 50d average (cyan and green). This is a waning trend, it's weakening. It doesn't look like the prior corrections. You'll have to let me know if me making notes and drawing on chart is needed, I don't know if from familiarity with it if its easier for me to see. I know some have complained I use to much jargon and inside baseball to be clear.

This period we are entering absolutely positively could morph into something that is more concerning and I'll keep an open mind to that. I'll be watching for a chart that start to morph into something that needs to be sold but we aren't there as of right now. You can choose to be on the "safe side" and assume that it will and feel smug if it does but that type of stance will cost more money than it saves. Trade the chart that is front of you, not what you hope it to be, not what you fear it to be, but what it actually is.

This is the current chart. We are in an incredibly strong uptrend and are currently in the middle of a strong counter trend. The best thing we can do is be patient, pay attention and go into it with an open mind. If the data changes our screens will fill with the proof of it and then we can adjust. But most should rest easy other than seeking alpha if you get it wrong most here are young enough to just accumulate and hold on.



I have been here for a long time, and I have said for a long time I will never cry wolf. If I honestly believe it's time to sell to even protect long term assets like a 401k I'll make a huge ass posts full of data explaining my position and I will never do that lightly, I hope people will consider my warning in their own due diligence that I'm not someone who cries fire with every whiff of smoke.

If it would help and people wanted it I could do a bear post this weekend. There are areas of "concern", I'm not some perma bull but I look at the weight of the evidence. As of this moment the weight of the evidence says be patient, and it's also more concerning than it was 3 weeks ago. Both of those things can be true. This could morph into something of greater concern it could also morph into better than expected outcomes. We'll tackle it a day at a time.

Lightning Lord Rule said:

I've been doing some index buys the last few days here and there, in the hopes that Blazin is right and this is all a sizable yet momentary dip. They all show red as fuck right now, but I think (hope) that will be different come about March or so.

If not, well, it's only money... right?

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Just adjust that expectation further out, you started late in this cycle and it put you in a tough spot. You really need "time in the market" and I'm glad to see you buying index. Our emotions tell us otherwise but unless we are actively living off the money the overwhelming majority here benefit much more from declines than we do gains. Accumulate and try to accumulate consistently during weak periods. Great time to make some ira contributions, maybe go heavier on the 401k at work etc.

We will be better off in the next couple years if we can get a healthy consolidation period, the pause that refreshes. I don't want to be buying assets inclined upwards on a 25 degree slope like we have been on, take the sale and think of years from now when you'll look back and say man I can't believe how cheap I got that even if in the days or weeks following you felt the exact opposite.

March 2020 sure had people scared and sanrith and I here looking dumb saying buy and some of those buys were early and looked bad until they didn't, and me with long winded preachy posts trying to tell people to not give in to fear, that was 100% ago.

We all want a correction so we don't have to overpay until that correction arrives.