When The Snowball Reverses

On 1/2/90, the Japanese Nikkei closed at 38,915. On 6/24/15 it reached its highest level in 19 years, 20,952. Its current 2017 high is 20,481 on 9/21/17. With all the debt expanded by the Bank of Japan to buy up their own government bonds as well push their stock market higher through purchasing Japanese exchange traded funds…. the Nikkei has still never crossed 21,000 in the last 2o years.  January 1990 made records never seen since. (The Bank of Japan stated that it started Quantitative Easing in March 2001, 8 years before the Federal Reserve launched Quantitative Easing I).  

Retail traders need to remember that of the last 103 months, only 6% of the time we have seen corrections. Never during this time has a major US stock indice declined even 20%. Professional traders and hedge fund managers that helped their clients during the bear markets kicked off in 2000 and 2007 have watched repeatedly since 2011 as hedging strategies were pounded and following the herd to the next record high rewarded. 

This is extremely dangerous. Anyone studying the speed of market corrections and flash crashes from stocks to bonds to currencies over the last few years understands how quickly liquidity providers (HFTs) can become liquidity consumers.  Anyone who was hedging or shorting during the many months of the two major bear markets since 2000 can tell you it was a different mindset than trading in the most assisted bull market on record. 

As we move closer and closer to the end of the 2nd longest bull market on record, consider these facts. Markets can drop swiftly, as seen during the four-day 2,000 point drop in the Dow during August 2015. There have been several records made since the December 2016 rate hike, both in insider selling AND retail buying. 

The last group will not be the least bit surprised when fantasyland smashes into reality land. They have been reading, writing, and speaking out for a long time. They understand this is not simply a financial game, but one helluva mental game. It is world history.

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Time To Plan for The End of a Bubble?

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