Post by
Starsearcher80 on May 18, 2022 11:30am
THE ULTIMATE FEEDBACK LOOP & BLACKSWAN COLLAPSE
I've had a theory that is probably about 2 years old now....a theory which has NOT yet played out. It goes like this:
1) The proliferation of EVERYONE in the market now, compared to even 10 years ago, is staggering. This is due to an absolute explosion of Funds, ETF's and the marketing that goes behind them. Then add in the now incredibly easy access to trading apps, RobinHood being the absolute poster child of people who should probably NOT be in the market...but they are. Then add in fractional share purchases. All in, it's an absolute insane powder-keg of EVERYONE involved. Long gone are the days where access to the market was for a priveledged few.
2) Then, looking at the market over the past 13 years (since 2008), the market has been on a tear that is beyond belief. Forget the 7 year cycle. This has been a supercharged supercycle, where EVERYONE won, and where EVERYONE just never lost. There is a whole generation in the market now that just doesn't know what a downside is.
3) Then add in the insanely easy access to money over the past couple of years, due to the one-off pandemic. If the market was already super-charged, this monetary policy juiced the market 10fold again.
All in? We've never been here before. This is new territory for sure.
But here we are, where the cracks are forming. Not little ones...big ones. But the market doesn't turn course easily, and that is not due to the realities not being severe enough...they are. It's the psychology of people in the market. Buy the dips. Hold on. It only goes up.
But finally, I think we're starting to see that psychology change. People are starting to notice the difference. There is fear starting to enter the market, and that fear is a powerful motivator. So what happens when people start to sell from their Funds? They trigger redemtions. And that means forced selling by the Funds....which makes the market go lower, which triggers more selling...which amplifies the selling. All in, there is now EVERY potential for the ultimate feedback loop.
Now add in the Fed going clearly hawkish. And add in insane inflation. And add in the Fed tapering. And add in a major war. And add in major supply chain issues. If that feedback loop wasn't potentially dangerous enough, it now has the potential to cause, I believe, a full on market collapse. That we don't yet have the participation of the masses is shown by the VIX being relatively stable to date. People have been scratching their heads over this, but I think it's just that the masses don't yet see the full weight of the mess to come.
So we'll see what comes. Personally, I wouldn't be surprised at all if there is a complete meltdown in the market. How powerful that is remains to be seen, but all the elements are now there for a true blackswan collapse.
Comment by
MrHappy420 on May 18, 2022 11:45am
It's good news for anyone with cash on hand. Take advantage of these major downturns
Comment by
Rotaluceps on May 18, 2022 9:39pm
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Comment by
Starsearcher80 on May 18, 2022 3:02pm
Further to the thought.... CLICK HERE
Comment by
Starsearcher80 on May 18, 2022 3:35pm
Today's dow graph is really disturbing. With this kind of drop, you would expect a capitulation pattern. There is absolutely none of that. Just the most steady and relentless selling.With the steadiness of this decline, we are not anywhere close to capitulation, meaning that there is substantially greater declines to come.
Comment by
dragshot on May 18, 2022 3:51pm
Yet, only us "weak and tiny minded" were the ones that could see this coming. Go figure!
Comment by
TheProphetElijah on May 19, 2022 10:10am
MJ is only game in town. Safe, 280e, MORE act all on the table. Imagine all capital flows heading this way. Star is right .coms all over again, even bigger though.
Comment by
TheProphetElijah on May 19, 2022 11:39am
Fighting gail force winds but in the green.
Comment by
Starsearcher80 on May 20, 2022 1:08pm
Why Clowns?! WHY?? WHYYYYYYYYY!! Have you not learned your lesson yet? Have you not learned that if I tell you something is going to happen, ITS GOING TO HAPPEN??? Today is yet another example. Read below again Clowns. ITS HAPPENING. Oh, and it's going to get worse. A LOT worse. ;)