The insanity of the markets

[MadHound]

It continues to amaze me, the disconnect between what is happening out in the real economic world and what the markets are doing.

Once more, on a day when inflation is the greatest in nearly a generation, when the value of the dollar has diminished once more, with no end in sight, when numerous banks and financial institutions are verging on collapse, when American companies are continuing to sink, or are being snapped up at bargain basement prices by foreign companies, the DOW is up currently up one hundred and eighty six points, with other markets following this irrational, enthusiastic trend.

Really now, wtf? What is going on here? Do these large investors not realize what is going on? Is this more evidence of the Plunge Protection Team at work? Are financial institutions bringing in more suckers to pump up this market for as long as possible?

All I do know is that the the markets are still severely overvalued, that they are still in bubble territory, and frankly in these economic times, one has to invest very carefully or you're going to get burned, quickly.

[aspergris]

1. I'll say this again

Rallies are sharpest in the context of a bear market

That's always been true

Think short squeezes

And fwiw, the markets were "severely overvalued" when Banks Index was 75 (it was 50 this morning)

Calling it severely overvalued now is imo ridiculous

Regardless, remember whether or not today's move is "rational " or not misses the point


Price is agreement. Price is opinion. the market is ALWAYS right. And the market can remain irrational longer than a stubborn trader can remain solvent trying to fight it.

Personally, I am doing what I do in EVERY bear market. Seek value. I buy other's pain and short when I can get nice strength

When the VIX was sub 20, that was a prime time to buy puts, for instance. It's recently been hovering mid 20's.

Traders are paying more to price risk

etc.

Nobody knows when the bottom will be. But most INVESTORS (as opposed to traders) shouldn't try to time the markets. That is almost always a losing proposition for RETAIL investors. they are better off dollar cost averaging.

Traders need to assess risk, sentiment metrics, etc. and be nimble with their entries and their stops

But generally speaking, buying panic and selling euphoria works.

Has for me. For years

Bull and bear market alike