Eric Jackson wrote about the financial world becoming “Bubbleheads”, read it here. In that article he takes an excerpt from an interview with Micheal Burry, one of those that predicted the housing bubble popping. Mr. Burry brings up the concept of a timer.
First let me get something off chest and clarify my point of view. Those that are constantly bearish/bullish have a couple things that many of us don’t. They have a lot of money (their’s or other people’s) or they make there living from writing or both. If you are constantly bearish you have a major advantage, you will eventually be able to say you were right. The market never escapes gravity. If it doesn’t matter if you make money you cannot always have the same view. Don’t get me wrong, all points of views are relevant in the market but some are better use to fade.
Back to Murray’s point, for any drastic collapse to work a timer must be activated. Unless a one sided view provides a timer, always be weary. Money is made by what you do between when the timer is activated and the bomb explodes. It took at least 3 years for housing bubble to work out and it might take 10 for it to recover. Liquidity matters in the way that things blow up and recover as well. Collapses also have a way of rewriting how a market moves and reacts. Be careful of those always trying to copy history.
With that being said, I do not know what happens from here. We are seeing some major technical breakdowns in many of the markets that we watch. On the other hand we are forming a big bell curve for the year and need to spend time between ES 1150 to 1250. Good news is still good news, too. At the same time, prices have matter less than ever at least in my 7+ years of trading. In a market with many participants, the “big” participants make money by being first. In a market with fewer participants, they make money from change.
Predictions are more lucky than anything in this market. Your ability to be right increases exponentially if you have unlimited time frame and money. Have a reason for a trade, learn from it, and accept responsibility for your action. Every view has a chance to make money.
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