Broad Market Outlook
As the market this week was bouncing up off support as we continue to shift into a range bound/consolation type market. The crypto markets had a disastrous week. That are great reminders for us on the many things to avoid when investing our hard earned money (avoid leverage, avoid following the crowd, avoid the it can only go up mentality).
As most new traders often have the memory of a gold fish when it comes to the change in investing themes, every new hot investment is always different this time, yet they rarely are. A decade ago almost to the day another major bubble was bursting in another currency.
Silver and Gold were the hot trades a few thousand days ago that was a topic on everyone's tongue. As always the parabolic moves shift once the clear sky positive news starts to get cloudy.
The silver bubble popped as the margin requirements were increased leaving investors to pony up cash they didn't have to begin with. That shifted the silver holders mindset from buy and hold as much as they can. To being forced out by there brokers (if lucky) as someone screamed fire in the movie theater. Or stubbornly trapped as those lofty prices to never be seen again hoping to get out for break even a decade later and still down 50%.
Now that pool of traders were much smaller then the current topic at hand given you had to pay to trade, getting margin was not as easy, nor was information decimated at the rate it is today.
Learning some lessons from Antifragile, it is safe to say no matter how low that space continues to fall, most will eventually bounce back.
Nassim Taleb brings up a point on the longer something is around, the more antifragile (strong) it becomes.
The stock market has been around for 100+ years, its safe to say it will be around for another 100 years, Bitcoin has been around for 20 years, it's safe to assume, it will still be here in another 2 decades. Scam coin that was made last week by some kid is as fragile as they come.
Keeping it simple and focusing on simple technical analysis that has been working for 50 years will probably still be much easier over the next 50 years then, say, trying to gamble in the same space that everyone was saying to buy just a short while ago, that now they can't wait to get out for break even, just when they should be doing the opposite.
Always remember there is no one more foolish the someone caught in the crowd, 20 years ago, beanie babies were considered legitimate retirement assets for a short window of time.
From Ben G
Macro Rotation Outlook