Bearmarket

It seems like the weekends have been reduced from the two full days of my youth, down to about 16 minutes now.

It’s moving fast out there and getting faster.

Billions and billions of dollars have fled the markets in recent weeks, as investors think the Christmas period’s albeit brief downturn means the sugar plums have danced in our heads for the last time in this bull run.

To wit, this latest "bounce" has not yet delivered those inflows back into markets.

In fact, the opposite has happened - for the most part, weekly readings have continued to show continued outflows even as stocks bounce and bounce again.

These compelling, deep-seeded fears have morphed into two primary flavours:

1)  This is now a bear market rally, and the bull market is dead, and

2)  This is a bad rally because it moved too far too fast.

That second point is actually borderline comical. I mean, when do you ever hear how a sell-off panic wasn’t worthy of attention because "it moved too far too fast."

Folks, the market doesn’t have a speed limit sign anywhere.

Consider this from Lowry's - a great technical pattern research firm for institutions – who says:

"According to the Lowry Analysis of the forces of Supply and Demand, the probabilities are extremely low that the advance from the Dec. 24th 2018 bottom is a rally in a bear market. In fact, since 1940, no bear market rally has shared the signs of strength exhibited by the advance over the past seven weeks.

Rather, these signs of strength, as detailed in prior reports, have been exhibited only in the early phases of major market rallies, specifically rallies off the 1982 and 2009 bear market lows and in Jan. 1987 followed by a 39% gain in the S&P 500 to the Aug. 1987 high."

So, let’s not get all sauced up again when we get days of red ink. 

This manic-depressive process does not serve any investor well…like, ever. 

Short- or long-term minded makes no difference.  The constant frenzy to label every action in an uncontrolled environment with "a reason that it unfolded" is a pure fantasy...and all it ever accomplishes is that it gives you a feeling that there is a reason for everything. 

 (Don’t you think folks like Gates, Zuckerberg, Bezos and the others who’ve divided up the digital-technology universe amongst themselves would have algorithm’d a solution to this by now if it were even remotely possible?)

We’re better placed not wasting effort and energy trying to figure out each gyration on a daily basis. 

You won't be able to and neither will anyone else, even with resources exponentially larger than your own.

And everything in between is just stories we tell ourselves.

Mike_williams
Author
Mike Williams
Founder and Managing Partner of Genesis Asset Management, New York