Buy, but For Real This Time
Before I start, I just learned that we avoided a government shutdown. Super pumped that the decrepit, addled, self-serving, morally corrupt, millionaires were able to put on their big boy diapers for five minutes and not suck. Seriously though, when are we just going to start paying federal elected officials the median national salary? What I keep hearing when I suggest something like that is that only rich people will run for office. As opposed to what we currently have? Oh, my good heavens, never mind, I wouldn’t want to upset the perfect political balance we have right now where people from all walks of life run for political office. Also, elected officials would be paid 75,000 dollars a year if they were paid the national median salary. That isn’t too shabby, and all their travel expenses would obviously be paid. Also, it isn’t like they would be stripped of the holdings they came into before office. Anyway, that was off-topic, but public servants who get rich off of being public servants make me apoplectic.
I’ve never been wrong, just early. Almost a month ago exactly I thought we had bottomed out, but I was wrong. I blinked and my TQQQ position was down 17%. Now, I was being silly a month ago when I suggested that you should pounce, now, I am being for real.
Also, if you lost money because of what I said, two things. First of all, I am sixteen, so cut me some slack. Second, I am genuinely sorry, and I’ll just be 100% correct from here on out, just for you.
Okay, I know this is super amateur, but looking at the CNN Business Fear and Greed Index is genuinely a good resource for getting a feeling for where the market is at. If you overlay the index with the S&P 500, you get a pretty strong correlation. Jumps up to strong greed precede falls for the S&P, and falls to strong fear precede jumps for the S&P.
Another indicator is that the VIX is way too high. The VIX is the volatility index the Chicago Exchange uses to measure how volatile the market is. The VIX is up 30% this month. The VIX generally inverses the S&P 500, for example, the Vix was at its YTD high when the S&P was at its YTD low, in mid-March. The general rule of thumb I like to keep in mind is that when the VIX goes up, SPY goes down. If you believe a rally is coming, and you are looking to make a quick, risky, buck you should buy one month puts.
From a more concrete perspective, the markets have bottomed out, because how much more bad news is there on the horizon? The biggest barrier to growth, interest rates, has been resolved. Everybody and their mother know that JPOW (Jerome Powell) is going to raise rates one more time this year, either this month or in November, and then cut as much as they have to next year.
Another concrete positive is that China’s real-estate problem doesn’t seem figured out at all, but the bubble hasn’t popped yet, so maybe they’ve pushed it off for a couple of years.
I hope nobody was worrying about this government shutdown having any impact on the market, but now that has been averted, at least for another month.
The auto workers strike is going to play out like this, the UAW will make a deal with one of the Big Three first, and then play hardball with the other two. If I had to guess, Ford would be the first company they make a deal with, but apparently, Stellantis has been making progress recently.
Also, on top of all of that, people have generally been scared for the past month. Scared of losses, scared of government action, scared of things they couldn't possibly control. Ridiculous, find a company you like, make sure it isn't overvalued, and buy.
Everything has been priced in over the past month or so, interest rates, strikes, China, inflation, and the market has been shedding value. Also, the groupthink that is so pervasive has taken over, and stocks just keep ticking down. No more, we have bottomed out. The market will flip back, until at least Christmas. After that, if The Fed cuts rates, we may piece together a genuine run. At least I hope so, as a Wall Street icon, I’m not sure my reputation can take many more blows.
