Quote of the Day

During August 2011, the US markets erased all their gains of the past 15 months. And now, in two sessions, the markets erased the past 6 weeks of rebound.

Here's a very good adage that you can hear about the markets:
Markets take the escalator up and the elevator down

This is also why bears tend to make a lot more money than bulls in this kind of environment: in a matter of weeks, all the pain they have been receiving is relieved, and the gains make so much more compared to the potential losses.


Tiho said...

There you go. You said it yourself and yet you still haven't figured it out, have you?

The reason markets take elevators down is because people panic. When prices crash, it is panic, liquidation and fear. It is not complacency as you keep saying over and over and over and over again hehehe.

Follow the price action. Price crash is fear even if some Bloomberg article says otherwise. Follow what investors DO, not what they SAY.

That way you will not get bogged down in media noise and if you practice what you preach, you will do amazingly well.

pej said...

Dude, I disagree with your analysis. Markets are dropping, but people are still seeing buying opportunities, cheap valuations, and market actions on the stock market vs the options IV skew, and the credit market shows a that there's still too much complacency.

We are definitely going lower before any meaningful bounce can happen. And I'm not even sure that the bounce will be meaningful at all given the deleveraging and redemptions that we'll see in the coming weeks.

Although we moved to the "fear" phase, we went one step back into "denial" instead of one step forward into "realisation" before "capitulation".