[Note: This material is for entertainment and educational purposes only. Discuss your specific risk-tolerances, needs and strategies with an investment professional]

ANY STOCK MARKET–even the over-supported and resilient US stock market–will sooner or later see to it that every successful trading or investment strategy fails miserably.  Right now, there’s a good chance that “buying the dips” and other bullish strategies will fall from fashion in the coming months.  This may also include investments in intangible or digital properties or currencies or meme stocks that became a source of easy wealth for millions of investors–most of whom aren’t aware that markets can go down or that value is not derived from a message board or chat thread.

A former colleague of mine, Peter H. (R.I.P my friend) used to say that “you shouldn’t confuse brains with a bull market.” He meant that when investments rise over a multi-year period, anyone playing the long side (buying) can make money.

There’s market lore from ninety-odd years ago, just before the Crash of ’29, where a famous investor got a shoe shine and immediately thereafter called his broker to liquidate all his positions.

“Even the shoe-shine guy is buying stocks,” he told his broker. “There’s nobody left to sell to.”

The current market parallels to the Tech Crash of 2000 and the Great Recession are stark. As with both earlier manias, today’s Federal Reserve flooded markets with liquidity and kept it there too long. In addition, in 2003-2006, investors were “herded” into riskier investments because interest rates were kept below inflation rates (this is termed ‘negative real interest rates’ where you lose purchasing power investing in, for example, CDs). This led to the real-estate and commodity  bubbles that later crashed.

Though the new Omicron variant will likely send the world into chaos again and may cause the Fed to rethink its new “tightening” monetary policy (raising interest rates and ending the massive QE bond buying campaign), everything points to a reckoning in the works: the market and the economy will finally thwart the long-side strategies that made investing too easy for too many for too long.  It’s hard to imagine how a Fed-brewed culture of speculation, leverage, and complacency can continue in light of the environmental, political, and biological obstacles in the road ahead.

Past articles that inform this topic are:

The Curse of the Eighty-Year Cycle (https://www.moviesmarketsandmore.com/the-curse-of-the-80-year-cycle/)

The Fed Magic Show (https://www.moviesmarketsandmore.com/the-fed-magic-show-they-made-something-from-nothing-what-happens-when-they-undo-it/)

Can King-Kong Inflation Take Down the Stock Market? (https://www.moviesmarketsandmore.com/can-king-kong-inflation-take-down-the-godzilla-stock-market/)

One Mania to Rule Them All (https://www.moviesmarketsandmore.com/a-mania-to-rule-them-all/)

One Mania to Rule Them All Two (https://www.moviesmarketsandmore.com/one-mania-to-rule-them-all-part-two-reality-comes-to-breakfast/)

WRH