Let’s not have any expectations about this ‘bear’ market
There is an increasing number of headlines shouting ‘Bear’! Whether it is or not, I don’t know but as these headlines proliferate, there are bound to be individuals who work up a passion ready to go short.
Most traders probably remember the fast and furious post-Subprime crash but how many remembers the slow motion deflation of the post-Tech Bubble correction (Dow, not the Nasdaq).
On the left chart we can see Dow Jones Industrial Average lose over 50% of it’s value in 18 months after the Subprime top. During the post-Tech Bubble correction (right), the same index took 34 months to lose just under 40%. In fact it took 14 months to cross a 20% loss threshold. At a minor high 16 months after topping, DJIA was trading down just over 3.4%.
A friend of mine who took a glance at this chart asked ‘U mean it might not come‘? He always thought the market was due for a great reset.
A great crash/reset/correction/whatever might or might not come but even if it did, it might do so in different shapes and sizes. Rather than working oneself into a passion to make money from a killer short, let’s not have any expectations about this market in case it goes the slo-mo way.
Besides, if we believe that a great reset is unavoidable, then surely the Masters of the Universe know this as well. What if they favour a controlled demolition or choose to boil frog slowly?
Rather than to fixate on a idea how the market will turn out to be, just go with the flow whatever turns out to be.