Your favourite Old Man is going on holiday, and as the markets decline, it sure seems like a good time to take a few weeks off.
Indeed, considering the state of the economy, this might be the last one I can afford for a few years.
I've been bearish for the best part of a year now, and whilst it took time before many accepted it, I don't see any way that the next 12 months will be much better than what we have been going through.
I have tried not to be overly pessimistic the past few weeks because it's holiday time, and people don't like to read miserable reports. But as many of you are coming back to this shit-storm, it's time to get real!
The first thing we need to realize is that for those involved in speculation and investing, we will still have the opportunity to make money during the upcoming tough times, we just need to be proactive and flexible.
But more important than being flexible and proactive is the need not to get emotional about what we do.
As I have said before, markets do not go from bearish to bullish overnight, so don't listen to the emotional, clue-less, bottom pickers.
Study, do your analysis, and don't let the emotions of others cause you to vie off course, or throw caution to the wind.
This means taking risks off the table if you can, and when you can.
I don't know how often I have encouraged people to diversify and look at a broader spectrum of investment products. But, if you are looking for opportunity in a falling economy, you need to seek out the best ones, and these could be anywhere. I am fairly well hedged at the moment, having used multiple assets, but I am starting to scan a host of different markets, and will be prepared to jump in anywhere, if I see a decent opportunity with a good risk/reward ratio.
It doesn't matter to me if the opportunity is in commodities, FX, crypto, or anything else. I keep myself flexible and I'm always aware that the goal is to preserve and increase capital. Not to be the King of Crypto. And do not underestimate the value of preservation during bleak periods.
There are far too many unqualified trading opinions and recommendations for my liking. Much of which is purely issued so a wannabe influencer can say "I told you so". My best advice is to ignore them.
If you are serious about speculating, develop your own strategy, and work to improve it!
As I have mentioned, you can make money if the market goes down, but you must speculate with an amount of risk known. That means you place stop-loss orders on every trade and never move the stops further away from your entry level. If you want to make money, you will need discipline. Not moving your stops is discipline NUMERO UNO!
Over the years, I have taught thousands of people about market movements and how to trade them, using all different types of analysis. But not one method is fool proof. So, you must expect losses.
And the only way to protect yourself from losses is to limit them. In a recessionary economy, when everything is bearish, limiting your losses is paramount.
For you crypto-guys, I know you worship the concept of HODL, but that is not a trading strategy. That is trading on a wing and a prayer!
The crypto markets have grown up, and some serious players with serious money are coming into the sector. These guys don't care what Elon Musk says about a dodgy coin and are not interested in whether the market survives or not. All they want is to get on the right side of a move and make money from the fools they can unload their positions onto.
The vast majority of traders are little more than algae for the Whales and the other big professional players. No big player is going to tell you what he is going to do before he does it.
A big player will buy and then tell you what instrument he thinks will go higher. Fools rush in, the price increases, and the big guys quietly dump their position in all the minnows. Once out, they will tell you why the price will now go lower. But for most of you, it will be too late. You have already bought way too late and paid too much....to the guy whose advice you followed.
I don't care if it's Goldman Sachs, BlackRock, or someone like Raoul Pal; they all do the same. They place a bet and then urge you to follow them, so they can get out with a profit.
Now before anyone starts screaming its market manipulation, think about it.
No one put a gun to your head and told you to trade! No one told you that you should not do your research! Indeed, everyone will give you the right advice, but in the heat of the moment, you got caught up in a frenzy and threw this advice out of the window.
I don't give advice. I tell you what I am doing, what I am looking at, and what I think might happen.
The guy who pulls the trigger on a trade is always responsible for his profits and losses!
I will leave you with one more thing.
Just because a million people think something is correct doesn't make it so. When trading, the only thing that is right or wrong, is the size of your balance sheet at the end of the year. YOUR BALANCE SHEET!
Be careful out there, it's going to be difficult, and people will get hurt. And remember, these markets are not charities. You will find that out when you try to get crowdfunding to pay for your losses!
That’s it, the bags are packed, and the plane is waiting.
Until next time, stay safe!