Keep Calm and Carry on Buying Quantum AI Tech Stocks
Stock-Markets / Stock Market 2022 Oct 18, 2022 - 10:17 PM GMTBy: Nadeem_Walayat
I must be a sucker for punishment to try and conclude my detailed 1+ year trend forecast at a time of maximum market uncertainty where major nations such as the UK are literally finding themselves on the brink of financial collapse! No really the UK financial system was a hairs breadth away from collapsing as it's pension funds that had GAMBLED ON INTEREST RATE DERIVATES with US rate hikes triggering a COLLAPSE in UK Bonds as Pension funds were forced to sell their most liquid assets, and the more UK bonds fell the more the pension funds were being forced to sell so as to meet MARGIN CALLS on their interest rate bets, which in effect was Britain's Lehman's moment prompting the Bank of England to BAIL THEM OUT by announcing that they would buy an UNLIIMITED amount of UK bonds so as to bring yields back down and thus push the capital value of Pension Funds UP so as to halt the forced selling that would have resulted in the Pensions funds defaulting and making the counterparty to their bets BANKRUPT! Yes you guessed it the BANKS BANKRUPT AGAIN! WALL STREET, LOMBARD STREET, CANARY WHARF, BERLIN! BANKRUPT! This is why whenever a patron mentions that the banks are cheap I tend to reply that you do know what they have gambled on until they explode!
In fact as soon as I saw the news flash on the screen that the Bank of England had announced they would start buying UK Bonds I immediately tried to Buy UK Bonds, first through AJ Bell and then through II.co,uk, NEITHER would offer a quote! A CRASH COMES ALONG and the piece of turd brokers stopped me from capitalising on it as I wrote in the comments section at the time. Obviously had I had time I would have investigated more options to trade bonds such as the spread betters, but they would probably have locked me out as well, the crooks of Lombard street won't let the little guys profit!
So the GAMBLING SOB'S WERE BAILEDOUT BY THE UK TAX PAYERS! That;s what happened last week! Instead the clueless lemmings that are the mainstream media and blogosfear went running off on a red herring that the it was Chancellor Kwasi Kwarteng's £45 billion uncosted tax cuts that did it! Which a. was a drop in the ocean compared to the £1+ trillion of debt piled up over recent years and b. the budget measures weren't to kick in until April next year.
It wasn't the budget that caused the crisis it was the GAMBLING BANKS AND PENSION FUNDS that once more required their Sow to step in and provide them with liquidity, UK rate hikes not keeping up with US rate hikes was the fuse that primed the bomb where the pension funds derivatives were the explosives going off until the Bank of England came along and pissed on the explosion. However the whole saga could prompt the Fed to reconsider the expected 0.75% rate hike at the 2nd Nov meeting due to the contagion risk it poses to the banking crime syndicate, i.e if the UK institutions had gone down along with them would have US! See Britain is not as insignificant as most imagine it to be! We can at least still blow up the financial world!
This was the icing on the cake for a year that has been one of the indices vs what this Bear Market has actually been all about i.e. "The Greater the Deviation From the High in Good Stocks then the Greater the Buying Opportunity being Presented." Where BEAR MARKETs turn this mantra into a powerful investing message, even if one had no idea of why stocks are falling this mechanism will get one INVESTED during a bear market!
The deeper and longer the bear market runs then the more pessimistic investors become, and LESS inclined to invest, even though target stocks may have HALVED or more in price! MOST RETAIL INVESTORS RIGHT NOW ARE LESS WILLING TO BUY THAN AT ANY POINT DURING THIS BEAR MARKET! In fact they have been gambling on options in record numbers, which is why options premiums are so inflated. Me too! Though I'm focusing on the very long dated In the money options which have room to breath such as the March 3600 to 3900 Calls, rather than near month out of the money options which are destined to expire worthless.
Just look around at the stock market and you will see countless downtrodden stocks that investors have convinced themselves could go much lower and hence hold off buying until the BOTTOM IS IN, that ethereal BOTTOM that will forever keep extending into the distant future, 6 months ago stocks will bottom in June or July, now it's Mid 2023, S&P 3000 to 2000 even!
The longer a bear market goes on the further and deeper will become the perception of where it will BOTTOM! This is ALWAYS the case!
In steps "The greater the deviation from the high then the greater the buying opportunity being presented" Note there is no mention of a BOTTOM, the thought process this mantra instills is the EXACT opposite of where is the BOTTOM! And it could get much WORSE! Experience bear markets of 2008-2009 or 2000 to 2002 and then investors will have experienced such depths of pessimism that many if not most won't touch another stock for DECADE until they get sucked into the next mania right before it POPS!
Imagine if you had just one simple mechanism, just one that if you followed it would get you invested during a bear market, where the greater the decline in the market then one would perceive it as the market giving one a greater buying opportunity and thus right at the depths of the bear market one would find themselves at their greatest exposure to the market, unlike most investors who will either have thrown in the towel and sold out or have convinced themselves that the bottom is the far distant future and hence have bought nothing or been fooled by perma clueless that bonds were a safe haven only find out that bonds have fallen even more than stocks! What the HELL! You told me bonds were a safe haven! That's what you get from the perma clueless!
This is how one gets invested during a bear market. the longer and deeper it goes the more I accumulate, adding funds as I go along.
The whole point of a bear market is to deliver discounting events, it is not to profit from! You cannot get a discount if the stock prices are going up, they HAVE TO FALL ELSE THERE IS NO DISCOUNT!
The profits will come during the NEXT bull market!
So repeat after me "The greater the deviation from the highs in good stocks then the greater the buying opportunity presented"
This article is an excerpt form my extensive analysis that concludes in detailed stock market trend forecast into the end of 2023 Stock Market Analysis and Trend Forecast Oct 2022 to Dec 2023 that was was first made available to patrons who support my work.So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $4 per month. https://www.patreon.com/Nadeem_Walayat.
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By Nadeem Walayat
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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.
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