Replies to post #2637 on Mining Sector Ideas

[gfp927z]

Bigworld, Trying to accurately time both sides of the market's movements, both up and down, is a tall order. Not many on Wall Steet can pull that off consistently, probably no one. Better to either play the long side or the short side, but not both.

I use the long side in part because the long term uptrend (going back many decades) will tend to eventually bail out a poorly timed trade. The SVIX is essentially a bullish bet on the stock market, but has some disadvantages compared to using the SPY or SSO. While the S+P 500 (SPY) is about flat from its July 2024 level, the SSO is only down 5%, but SVIX is down a whopping 60%. So as a bullish vehicle, the SVIX can't be held for extended periods.



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[gfp927z]

Bigworld, One scenario is we get a repeat of 2022, with the market drop lasting 9 months or so. Back then, with the Fed tightening, everyone was watching for signals from the monthly inflation numbers to determine how long the cycle would last, etc. This time we'll have an extended period of watching for deterioration in the monthly economic numbers, the level of inflation, etc. So more risk than in 2022, and even if inflation doesn't soar too much, the economic numbers likely signal a slowdown / recession. So the stock market drops more, over an extended period, until 2026 (?)

Wildcards / unknowns include whether Trump decides to change course early, as the economic numbers start to deteriorate. Or does he just continue on with the policy until we're in a full blown recession? I was figuring Trump would already be backing off of the tariff policy, but instead he appears to be stubbornly doubling down on it. Anyway, I've seen enough, and will probably just sit in cash until there's a reason to get back in -- ie 1) Trump backs off, or 2) the full recession / stagflation plays out (2026) (?)

Who knows, but #2 is looking more likely, and in the period ahead, simply not losing money could be a victory.



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