I have been doing very little trading in the past few weeks and am likely to do very little for the rest of this year. The time to buy was in the first quarter when the current stock market rally was much earlier in its game. I did several videos back in January saying that I thought that the bear market of last year was over, citing the “Breadth thrust” indicator. However, I also said that I thought this would not be some massive bull market that would last like for years on end. I said we were not going back to the way things were before 2021, but now everyone is getting bullish again. Now that they are buying they want new reasons to believe and so the gurus are claiming that we are in a new AI revolution that will make inflation go away and create a new economic boom for everyone.
That was the message in this interview of technobabble queen Cathie Wood done by CNBC superstar “Downtown” Josh Brown.
In this interview she claims that the economy is in deflation. She said this last year and the year before and was wrong then.
The inflation we saw start two years ago has not gone away and is a secular problem.
What the Federal Reserve talks about is a “disinflation” – which simply means that the rate of inflation has fallen.
Deflation would mean that there is no inflation and that prices are declining from where they were a year ago.
They are not.
The prices in the grocery store are not a falling.
She is pure financial slime and Mr. Brown treats her like royalty – probably hoping to grab some more Youtube views by being her friend.
Stock market valuations are at a nosebleed level.
In reality we are in a secular bear market- that is a ten year long plus bear market cycle – and experiencing a short-term cyclical (2-5) bull market within that long-term secular cycle.
The DOW went through a secular bear market from roughly 1968 – 1982.
It was a time of inflation.
The inflation of the 1970’s started in the 1960’s.
What I thought in January was that we could see a cyclical bull market rally that could last into next summer and then the start of a new bear market in the second half of 2024 or in early 2025. Maybe things could be “ok” until the next Presidential election.
One can’t predict the future and exactly how things play out – but for me what is the most important takeaway is that the market had upside potential – but limited upside potential.
People were much more doubtful about the market in January then they are now.
Now they are claiming the potential is unlimited again and Cathie Wood videos and interviews are rising up on Youtube to become the most viewed videos again.
I haven’t done a video myself in over a month, because Youtube algorithims will not promote them to people.
That’s because the algorithms know that people want to hear bullish talk – and not talk about prudent investing or managing risk.
People want to hear about NVDA and talk of an AI revolution, even though the last meme – “Metaverse” turned into a total flop.
The problem with investing when you have a cyclical bull market is it is hard to hold on and believe.
I was 60% invested by the end of January and went down to 40% in March after the regional banks blew up and just shifted more money into short-term CD’s and bonds paying 5%+. I just assume to keep doing that even if the market has another 10% upside potential from here I don’t care.
If the S&P 500 got to its all-time high that would be an 11% gain from here.
The problem is talking about putting 50% or more of one’s money in bonds and CD’s is not a message that will get Youtube video views or any sort of interest from people. Someone talking about doing little in the markets when the people who are most engaged are watching CNBC, trader videos, and so forth is not a way to get readers, views, or clicks.
So, I’m stepping back for now, doing less posts, until I actually get excited about something new I see in the markets to do.
I’m using this time to work on some other projects I got going.
If you want to play AI it seems like the only bet people are doing is NVDA.
As for myself, I tried playing with the CHATGPT and it reminded me of playing with a ouijia board when I was a kid. Some of the answers are nonsensical and the whole thing is a waste of time. I am going to talk to real people with knowledge and wisdom when I want to learn about something or advice and not some silly chat robot. I got something I am thinking of doing and I am going to go hire a lawyer to talk about it first for advice! I’m not going ask the AI chat machine lol.
AI just isn’t the big deal they are making it out to be. It’s a meme to get people to believe in tech innovation – just as “Metaverse” was – and a sleight of hand. AI is not going to destroy the world. These warnings by Elon and his Silicon Valley tech buddies saying that are a game they are playing to distract people from the bad things they are ALREADY DOING RIGHT NOW.
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-Mike
