Those who had learned to invest based upon free market principles have long been at a big disadvantage since governments have increased their interventions in the market.
We have had more trouble trying to figure out what the future impacts (i.e. winners/losers) in the market will be from current government interventions.
Those investors whose have little or no past investment experience seem to have done very well because they aren’t burdened by past experience which appears to be irrelevant in today’s government controlled market.
Its really simple. Most folks get it backwards and that’s why 90% of market participants lose money over the long-term.
Shortists now are all waiting for the spike UP, before they plough in.
There are 2 ways this market now will move:
a) SPY, QQQ (which are both highly correlated… forget the Dow which is non-representative given that its price-weighted) and other broad market indices both in the US, Canada and core EU countries will plod along HIGHER and higher.
This is to make the pain more pronounced for the vast majority who lost out to inflationary effects and were not invested for the past decade or so.
These folks will watch the markets RISE ever so slowly with increasingly pained expressions on their faces.
b) The market will then SPIKE Upwards at at unpredictable time.
If all the current BAD news and trade wars cannot bring down this market, just imagine what happens when all these bad news eventually run its course and fade out.
Now, when the vast majority watch with horror on the SPIKE Upwards in the markets, they will feel so much pain then, they will then invest all their chips or a big portion of their money into the markets….and then, this is the time when the market will CRASH big time and wipe out these mom-&-pop investors.
The timing is uncertain but this will always happen because a big enough pile of cash always attracts predators.
The vultures of Wall Street are watching with their AI-assisted computer algos to extract their pound of flesh whenever they see a big enough pile of money building up.
c) Thats when the shorts will enter when the big crash comes, NOT before.
However, a word of warning for those reading this: It does not mean you will make any profits if you short the market on its downside, because you have to have lots of capital and the stomach to weather the huge volatility of short-term whipsaws and margin calls, which will most certainly wipe out many of these shorts too.
d) When all the shorts have lost most of their money, then and only then the market will naturally settle down since most market participants would have lost everything on the markets and hence there will be very little liquidity left.
Then, these Shorts will watch in horror as the broad market indices really do crash and prove them right BUT at a WRONG timing, since by then, they have little left in their accounts to capitalize on it.
In short (pun-intended), fence-sitters will lose, most shorts will lose too, and for the majority, its damned if you do invest ’cause you may get burned just when you invested, and damned if you stay by the sidelines cause the market will move slowly higher and higher until its so painful you do actually invest a material sum.
Mostly Wall St gets to profit from the crash. Being short as a individual investor with no insider knowledge and no insider real-time data is very dangerous
