FTSE Hits All Time High(Warning: Cynical Tone and Bias ahead)
This headline hides the reality-the index has risen 13.8 per cent this year, in dollar terms it is still four per cent lower. FTSE 250 is up about 3.7% not accounting for the £ devaluation. When volumes are wafer thin, it does not require billions or anything like, to ramp up the index for those big bonuses.
Does It Make any Difference to Us?
The market is what it is- a bunch of buyers and sellers. Except these buyers have got a planet sized wallet. Markets tend to go up most of the time. It is expected that annually, up days would outnumber down days by a tiny margin. By my reckoning this year there were 138 up days, 116 down days. That’s huge. Option premiums ‘feel‘ like they are not as juicy as they used to be.
It Makes a Difference to Them
The whole game is based on rising markets, so all those institutions rely on the ‘good news’. You’d be mad to buy at the top in any other endeavour. You’d be made not to sell at the top. History shows this. Yes the market can carry on rising…. until it doesn’t. That is not to say bet against it, but to use probability, and be prepared for some downside. Caveat- Do your own research.
The Next Crash Will be Along shortly
I keep getting emails with these sorts of silly predictions. Nobody knows when the next big drop or even a crash will be, but that does not mean we cannot prepare. When puts are cheap we buy them. Puts deliver. Puts are insurance and the payouts are often substantial. Just sayin’ ……..
Ponder some inexpensive put strategies for Jan/Feb, and be prepared. Remember-Pride comes before a fall.
Among the hardest things to do, is to get rid of prejudices which have a basis in real life misery. My early full time trading was profitable but I was constantly playing catch up from 2003-2005 as the market rise was relentless. This was built on the bogus economics of Dubya Bush and the rampant money printing( helicopter Ben anyone?) It took a long time for this idiocy to filter through to reality,but by 2008 it became apparent that trying to make a 20 mph economy run at 50 mph was not going to have a good outcome. This is STILL not resolved. The debt mountain increases,and only due to low (negative) interest rates do we still have working economies.It’s a global staring contest with debt and we remain cautious as to who will blink first among the prime candidates China, Ems, most of the minor European countries.Markets climb a wall of worry and we trade the market NOT someone else’s economy.