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|User Info||The Caution Light Is Lit; entered at 2018-01-12 09:59:24|
I've said this before, and it's worth repeating: nobody really knows when the moment of truth arrives and the market reverses. I can tell you this, however, the majority must be wrong in order to set up the forces necessary for an epic crash. My uncle ( a man who became a millionaire during the Great Depression ) said it best back in 1981, "America is going to recover because the crowd thinks it won't". He went on to become so filthy rich. I always liked to visit him back then so I could view his gun collection. By 1990 his gun collection alone had so valuable that it had to be housed in vaults or the insurance company would not cover it. |
Back in the late 70s and early 80s you could have bought just about anything and turned a huge profit within a decade. I remember buying a custom, American made, Fender guitar for less than $200 bucks. That same instrument is worth north of 10k now. I also remember the nice lady down the street who had to eat catfood to keep from going hungry. People make choices, and people live with them. Since 2008, basically the same situation has occurred. What I picked up for practically nothing in 2008 has gone up so much that it feels obscene. Everything but gold. That was a bad investment, and I only hold it now as "insurance"... and, because, gold will once again skyrocket when the time comes.
What I learned from my uncle was watch closely what the retail investor is doing and thinking, because most likely it is they who signal the tops and bottoms. "Value" is an ever changing subjective opinion which is driven by the herd. And knowing what (or who) drives the herd is one of the keys to surviving the downturns and profiting from the bubbles. What I see now is the retail investor who was burned back in 2008 either getting back into the markets or thinking about it. I often hear, "I wish I didn't get scared off from investing during the 'The Great Recession'" and "I should have never got out of the stock market".
To me, this signals that the majority have missed the best part of the party. I'm not saying that, for example, the Dow couldn't go to 35000. It could. Easily. Why? Because the system is so corrupt and the markets are not driven by true price discovery.
Members of my family have followed my advice by staying IN the market. But what I now tell everybody is: if you missed the beginning of the markets like Bitcoin, FANG and high-end real estate, don't bet the farm now. Bet only what you can afford to lose or don't bet at all. In fact, personally, I no longer buy or even deal with some companies because they are just so obscenely corrupt. I'm not telling anybody where to draw the line, but everybody should think about what it means for the markets to be driven by outright fraud, racketeering and cartelism.
I think that's why I like reading Karl's blog, because he has the integrity to point out the scams.