EC A Bull Market In Wheat

When you develop a desire for trading, you must realize that the desire originates from the greed for profit and that it is only a feeling that has little to do with the possibility of making actual profits. Therefore, you need to identify and control the greed when it grows in you. Meticulous analysis of the possibility of making actual profit should be your priority. ~ “The God of Trading, God: The Creator of Japanese Candlestick Charts”

Good morning!

In this week’s Dirty Dozen [CHART PACK]  we look at household’s high ownership levels in equities, before diving into what this means for future returns. We then discuss elevated risk metrics, the Buy Climax case, growths emergence overvalue, the bullish setup in semis, and some Ag related news, plus more…

Let’s dive in.

***click charts to enlarge***

  1. I like to check in on household ownership of equities as a percentage of financial assets from time to time (it currently stands at 43.2%, just shy of the all-time high reached in 2000 of 44.6%).

This chart from NDR via CMG Wealth gives another way of looking at things. Here’s household financial assets versus income. It’s a little elevated.

  1. If equity ownership as a % of total financial assets continues to be a high signal guide for forward returns, then probabilities point to a -0.50% annualized market return over the next decade (NDR chart via CMG Wealth).

  1. Goldman Sachs Risk Appetite Indicator is close to an all-time high…

  1. From GS “high RAI levels means the likelihood of very strong S&P 500 returns (>10% over 3m) is usually lower. But the risk of very large equity drawdowns (>10%) is also usually lower because there is likely a strong macro backdrop that has boosted risk appetite, similar to the COVID-19 recovery. Nevertheless, there is a more negative skew of returns, and the probability of corrections increases.”
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Disclaimer: All statements are solely opinions and are for educational purposes only.

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