The World of Emotional Finance
Since the low of 2009, the markets have enjoyed a 100% +rally. From being literally minutes away from a global meltdown, to this. How? QE explains a lot. Quantitative easing is the infinite wallet, the bottomless pocket, that we gifted to the banks. This tsunami of cash, in conjunction with effectively negative interest rates has thus created a monster. There can be no going back. A 1% rise in interest rates could topple the whole thing. We have more credit, more debt, more problems with debt than 2008. We have created a balloon which cannot be easily deflated. I cannot feel anything but concern. The political world has yet to avert disaster. I wish I had more hope.
What Is Making ThisMarket Hit New Highs?
I don’t know if there’s a simple answer, or even a complicated one(conspiracy). I know this- a profit is not a profit until the cash is in my account. Holding on to their stock at these prices, a trader is either deluded, careless or has some special insights. I like to take profits when I consider the risk is no longer acceptable. For my money, the risks have been unacceptable since the White house changed sides.
The Other side of The Coin
We know the trend is our friend. I’d argue that nothing has changed(sort of) so it therefore makes sense to add to your winning trade. That is perceived wisdom. It is not entirely my experience, hence my bearish stance. I found it easier to make money in 2008/9 than 2003/4/5 when the markets were on a tear. My options trading is a reflection of this. I am always looking to buy cheap, aim to sell expensive, and that needs a market to drop. Long calls? In isolation, no thanks
