VeeDubb has an excellent question.
I’ll say this first. I did a lot of message board work in the late 90s thru about mid 2001. Most of the questions I got were just plain stupid. This one is far that.
Let me answer this with some history, this will help put things in perspective.
I’ve been doing this for almost 35 years. When I remind people about the gay ole’ 70s most don’t have a clue of or remember what I’m talking about. If not for the guidance from my grandfather, who was a floor trader in Chicago for 25 years I would have been shorting more than playing long thru half of the 80s due to past experiences.
Let’s fast forward to the 2000-2002 sell off. In late Feb. of 2000 I was telling anyone that would listen to get out!!!! Some did but most didn’t because the market was going up. 6 months later I would get asked about the market, I would sorta’ shrug and say all’s going to plan. Labor Day weekend might mark another top and it did.
Go forward 2 more years and I was then starting to turn around on my bearish theme. Everyone that was beheaded the past 2 years wanted out at any cost. When I asked why they said because the market’s going down. I remember saying to a friend something like fine sell me your shares & I got some crazy looks.
Then last fall those same people were buying hand over fist. I said why and well I think you know the answer.
Human psychology is power full. This is partially why I’ve spent thousand of dollars & thousands of hours in building a system, which BTW dear ole’ gramps started so it matters very little to me what’s going on in the real world. Cycles dominate dominate dominate dominate dominate. News is usually S/T noise.
Everyone is blaming the sub prime mess on the current correction. I can counter that with almost every correction and rally going back to the 1790s. For every event, the market has always reacted, when looking at the big picture, to within 6 months before it happened. Insider info? Maybe but it usually has a pattern.
Sure things like 911 and assassinations can’t be projected. Yet wars can be projected. Our market cycles were negative going into Sep. 21, 2001. Lucky? Maybe.
In the case of these sub prime issues, this was first made public a year ago and the market continued up. Why then if sub prime is so bad? Too much at once? I still say cycles dominate.
Mid 04 I showed a few friends where the market could top in early or mid 07. I should have that someplace if the wife didn’t toss it.
Anyway, even though I said news to me is just S/T noise it has yet in all these years failed to amaze me when I position myself at or near an expected pivot point that some news event will come out in a day or 2 to make the trade very effective. Today is a good example. My wife thinks I’m possessed & she’s probably right.
If not for cycles Pappion would never have had a good story to tell. Am I spinning a web here? Well, my wife says I can sell an icebox to an Eskimo. Yet all of my calls since I appeared here in early Jan. have generally played out, so far anyway.
So, if the human psychology history story didn’t answer your question the following will.
I’m aware of the indicators you mention and of your concern. Heck you’re not human if you don’t have any concern for yourself and family. I use the indicators mentioned to some degree but my system contains over 50, some of which are very unconventional. Cycle projections are another system. When the 2 agree it’s a full boat trade.
IMVHO You want to be in equities when looking at the big picture. We just have to finish this correction we’re in, which should be done by early April or hopefully confirmed around then.
The big bear will hit again but I firmly believe this isn’t it. The 70s theme will also return in most of our life times. The 2 events will happen in combination with your concern first if the major patterns continue as they have.
Once again a very good question.
