Patience, Faith And EFA

Think back to January 4th for a moment. Probably no other financial instrument better captures the frustrating circumstances of the market than our beloved EFA. What a month earlier was a beautiful head and shoulders pattern had become a distorted monster, roaring higher on almost a daily basis. It was a miserable, faith-testing period for those of us who perceived it as a topping formation.

Fast-forward about five weeks, and instead you have this:

Let’s face it – – for anyone with a bearish mindset, the span of time from March 2009 through December 2021 was a dozen years of Hell on Earth. Insanity beyond all belief (and if you want to see how that’s working out, just glance at the trio of The Wretched posts I’m rolling out this very weekend).

In the final death spasms of the cursed bull market, the entirety of investing humanity had been trained, trained, trained, and trained some more, on the simple realities:

  1. For people who are BULLS, you will always be OK. Buy the fucking dip. Hold On for Dear Life. You will never lose. You will always get bailed out. If something goes down, it will always come back. The government has your back. You aren’t really taking any risk. Just hang on tight, and you’ll be rich.
  2. For people who are BEARS, you have no hope. You will always get run over. You might be able to pick up pennies in front of a steamroller sometimes, but you will still lose. In the rare instances you might have some profit, you better take it and take it now, because otherwise it’ll be gone the next time you blink. You are a fool, and your punishment for being a fool is you’re going to lose.

And that, my friends, worked like a charm for nearly thirteen goddamned years.

It is my firm belief that the bull market ended only a few days after this year began, and what we’ve seen so far are just the first modest effects of a bear market which will ultimately threaten society as we know it. I further believe that, worldwide, life will become so saturated with miseryterror, and horror, that even those of us who have been predicting, for lack of a better term, The Fourth Turning, will take absolutely zero pleasure out of the fact that it is finally transpiring. No one with a shred of decency will garner glee from the “I Told You So” moment. We’re on the same planet too, you know. Indeed, I have stopped wearing my goofy Beatles suit on my tastytrade show during down days, since I don’t think there’s anything jolly about the source of market weakness we are witnessing.

I have a family. My first duty is to serve that family. I will use whatever knowledge of history, strategic planning, and mental acuity I might have at my disposal to maximize the likelihood that my family is, to the extent possible, sheltered from the sh*tstorm to come. At the same time, I hope to use whatever insights I can garner from my own talents for the benefit of whomever makes the choice to read my work.

For the immediate moment, the vast majority of people, bull and bear alike, are suffering in this market. The bulls are suffering for obvious reasons, but even moreso because of the aforementioned “rules” that are burned into their brains. How would you like to be the one who keeps buying more and more of RBLX because everyone else on /wallstreetbets is telling you that it’s going to the moon?

As for the bears, the vast majority of us are paying, shall we say, a Fear Tax, based likewise on the rule set I’ve mentioned above. God knows I have. To my credit, I spread myself out among so many positions (41 one of them, as I am typing this on Friday evening) that I short-circuit my ability to be hasty and dump everything out of fear or panic. However, as I have expressed ad nauseum, there have been ample positions I have left only to see them continue to progress higher by hundreds of percent in additional profit.

But it makes all the sense in the world. Why wouldn’t I? And why wouldn’t you? After all, if you’ve spent nearly thirteen years having the above realities pounded into your head (and your equity curve), you sure as hell are going to be inclined to Take Any Profit before the big bad bulls come and take it away.

Even in the serenity of the fading Friday sunset as I am typing this, I know I’ll continue to be jumpy and paranoid every single time I fire up that monitor and wonder if the ES is limit-up because of something or another, and I’m going to see my massive profits get torched into a fraction of their former selves.

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