In case you didn’t see my Saturday morning note, it seems to have struck a chord with a lot of people.
You see, somewhere along the way, people ignorant to reality just assumed that if we did a better job of educating investors, then it will prevent them from making reckless decisions in the stock market.
It’s so adorable to believe that.
I mean, you can tell yourself it’s all rainbows and butterflies, if you want to. You have that right.
But it’s complete nonsense. The truth of the matter is that it’s an ugly world out there. Grow up.
You can try to help these people all you want. It’s not going to matter. That’s just not how humans work.
I reached out to a colleague who’s much better on the science side of this, and here’s what he had to say,
“If there’s one thing we know from Behavioral Finance it’s that education doesn’t do a whole lot to change behavior. Especially when big money is on the line. I don’t like to pick fights with those folks because “we don’t need education” is an inherently unpopular position, but facts are facts.”
I’m fascinated by human behavior. It’s what I’ve been analyzing every single day for almost 20 years. The one thing I’ve learned for sure is that people are freakin nuts!
And there’s nothing you can do about it.
So, as investors, what’s the only thing we can do?
Worry about ourselves. Focus on what’s happening, not what we think “should” be happening. No one cares what you think, especially not the market.
We have to manage our own risk. No one is going to help us. It’s actually the opposite, it’s the whole world against us. They’re all out to take a buck from you. So you can either give it to them if you want, or stop them, and keep the money for yourself and your family.
We’re all traders and investors. That’s why you’re reading this. So here, we think with the mindset of this being an incredibly selfish endeavor.
It’s not about anyone else. It’s about us.
We’re in the market to profit from the ignorance of others.
There are no 7th place trophies here.
There is no “everyone can win” scenario.
It’s zero sum.
That’s just the way it is.
You can check out this weekend’s post in full here.
Did you see Silver over the weekend? People are going bananas!
I’m loving this breakout. It took approximately 6 months for demand to absorb all this overhead supply from those former lows in 2011-2012:
This is classic market behavior. Former support turns into resistance. We call that the “Principle of Polarity”.
So the market finally breaking out above that level is the signal that demand has finally been able to absorb that overwhelming supply that had been in place since last summer.
If Silver is above 27, we want to be long. 35 is the next target, but bigger picture I think we get back to 50.
The Revolution Will Not Be Televised!
Are you ready?
Because from where I’m sitting, most investors are not.
The New Commodities Supercyle is really getting going. Notice the outperformance from Commodities and indirectly (very directly?) Emerging Markets, since Crude Oil traded below zero. Can you think of a better catalyst to get this party started?
I don’t think people are ready for this.
“The Stock Market Is Broken”, LOL
It’s been another couple of days of people absolutely losing it over what’s happening in the stock market. Let me ask you something:
If “Saturday Night Live” tells viewers on three separate skits in the same episode that the stock market doesn’t work, do you think there’s a higher likelihood that it actually doesn’t work? Or does that mean that it’s working just fine?
What SNL and investors all over the world are finally figuring out is that we’re much better off focusing on the behavior of the market itself, and therefore its participants, instead of the goods and services in which a particular market deals. It’s called Technical Analysis. pic.twitter.com/BEpBVrzB85
— J.C. Parets (@allstarcharts) February 1, 2021
The Volatility Index hit its highest levels ever for an S&P500 that is still within 5% of all-time highs.
That is people scared. That is people overpaying for insurance.
Now, let me ask you this:
Does insurance get this expensive just before you’re glad you had it, or does that usually happen when the insurance wasn’t necessary after all?
They’re scared to death.
Probably for a lot of the same reasons mentioned above. You just can’t teach away crazy. All we can do is try and profit from their ignorance. Whether it’s nature or nurture is not our problem. Extracting money from the market, instead of donating it, is our problem.
If you need me, I’ll be putting the finishing touches on tonight’s presentation.
I hope you’re able to make it live.
See you then!!