Most of us remember fondly, February and March of 2021. Prices of stocks were high and looked higher. Even though the “Indices” moved higher – most stocks lost momentum, and many dropped in price. Now we are seeing a continuation of this market activity. The trendline in the S&P 500 has now broken lower. See below chart.
Odds are we will see limited growth with higher prices for various reasons. Higher wages, higher interest rates, supply lines being broken or delayed. A number of countries have given up fighting Covid 19 and have decided to live with it. Norway, Denmark, Singapore and Thailand are among this group. It’s likely a growing trend and be disruptive to supply lines, but IMHO the right thing to do. Much is known about the science and who is vulnerable. The actual death rate and people’s frustration with changing policies will force living with Covid, to be the trend. All points us towards economic Stagflation.
Passive investing will be sacrificed and stumble. The market is no longer rising, simply because interest rates are falling. Active investing (stock picking) will be needed to out-perform the markets and be profitable. That is our game, so LOTM is comfortable with this development.
LOTM is not making many if any changes because we are positioned exactly where we want to be. Conservative and in value stocks with strong balance sheets and high cash flows – Physical miners and commodities. We are strongly positioned in the fastest growth industry in the world – Blockchain.
We believe the “Bear Market” will be three to five years long and a gradually eroding grinding experience – not the Black Swan event most of us are fearful of.
- Pick and choose your companies and industries.
- Make sure they are low debt and high cash / cash flow companies.
- Not dependent on low interest rates.
- Best if they are producing commodities and not dependent on commodities
- Best if they are not dependent of “people costs” – wages or benefits. Or even people. Hard to get people back to work.
I am very optimistic about the next couple of years. Just don’t take a passive approach and think you will make money by “being in the market”. It is going to be a lot tougher than that.
- Take some inverse ETF positions.
- Know what you own and why you own it.
- Have a plan to harvest profits without an “all-in” or all-out approach
- Have an exit strategy if your plan isn’t working.
This is an excellent time to build position with a three to four year objective at lower prices but where you can see higher prices for “real reasons” not pie in the sky hopes and dreams.
I would like to share an excellent video where the trader has a very similar view as LOTM has been talking and working.
1.Bear market is imminent; Short these stocks, real estate – Anmol Singh Sept 28, 2021 – Kitco
Bitcoin & Crypto Comment… The last 24 hour shock rally in Bitcoin seems too fast and too big. I am leery of this being a rally in a down trend. A Bull Trap.
A bull trap is a false signal, referring to a declining trend in a stock, index, or other security that reverses after a convincing rally and breaks a prior support level. The move “traps” traders or investors that acted on the buy signal and generates losses on resulting long positions.
I will be wrong if /when Bitcoin moves above $50,000 and holds it for a few days. Always remember we are dealing with probabilities and not absolutes.
Published for Daily readers of LOTM, on October 1, 2021
NOTE: Update on Oct 2, 2021, 2021 on Bitcoin Crypto, comment by Fed Chair Jerome Powell stating that the US government would not ban Crypto is a game changer. We are now bullish on Bitcoin and other Alt-crypto assets. We see the reason for the jump in Bitcoin price and think it is a game changer for pricing in crypto world.
Federal Reserve Chair Jerome Powell: U.S. Has No Plans To Ban Bitcoin and Crypto
Available for Coaching, Training or Mentorships
Contact LOTM For One-on-One consultations.
Rate: $150 per hour / Monthly Retainer, Lowers Rate
LOTM Research & Consulting Service
Where Value meets Buy Signals!
Feel free to forward or recommend to others.
* An account related to LOTM holds a position in this security.
Neither LOTM nor Tom Linzmeier is a Registered Investment Advisor.
Please refer to our web site for full disclosure at www.LivingOffTheMarket.com ZTA Capital Group, Inc.
To Unsubscribe please select “return” and type Unsubscribe in the subject line.
