If 2020 was not crazy enough for the markets, 2021 is definitely catching up
or trying to show that it won’t be normal or easy either-
So what is going on-
First, we have a super short-squeeze. Institutional investors are getting burned by the swarm of individual investors’ gambling their money on destroyed stocks-
It is rarely the case that a flood individual investors can overrun institutional investors who are more sophisticated and have more money-
But welcome to 2021- And I won’t be surprised if this will keep happening-
Most shorted stocks will go to the stratosphere, destroying funds, before it explodes and every investors get hurt.
I won’t be surprised if I see individual investors doing more crazy things-
There will be blood for sure.
I would not buy the most shorted stocks because eventually reality will kick in and destruction will be complete.
Remember Hertz, yeah, that didn’t end so well…
Game Stop will not end so well either-
Second, the market is way too aggressive-
There is low level of option hedging, low shorting but high margins–
If this is not the peak then we are definitely close to it-
Yesterday, I bought a bunch miners that got destroyed for no good reason and today, I sold them and made good profit-
I did not expect such violent move today but when the mass is angry and swinging anything goes-
I am super heavy cash right now 40%+
I am hoping gold and silver miners popping with the mass pushing First Majestic Silver (AG) up-
But I will remain cautious- I will put more money in once the gold price and gold miners move sort of in sync-
Right now it is pure madness- Some gold stocks didn’t even move much and of course gold didn’t move each other- So it’s just the mass coming and pumping.
You can make good money if you catch the right wave or you can get smacked by it as well-
Way too dangerous- I am thankful that I am an individual investor with lot of cash on the sidelines-
Short hedge funds should be in a world of pain and long hedge funds also should be hurting because fundamentals are nowhere to find.
Even the quant funds should not be immune to the tsunami of individual investors. Quant trading doesn’t work when unexpected irrational behavior comes along…yup…indeed. Don’t be surprised if quant funds report negative performance.
Trend following funds should be relatively Ok but they have good risk management as well so I would expect that they are not riding the small investor wave because they know all to well, where it would end up.
Yeah very crazy markets- And when markets are insane better to stay out-
The only issue is that there isn’t much anywhere to go literally. Bonds are expensive. Money is losing value every day because of inflation…where else can we put the money except the stock market?!
But now even the equity market has gone haywire….tough times-
For now, I will hold on to my cash and swing trade a bit-
I thought 2008 and 2020 were quite crazy and extreme but 2021 is telling me that I haven’t seen anything yet-
Praying for America and the world. God bless us all!
Thank You Jesus for a blessed day- Let us always be thankful and give You all the glory Amen!
Rejoice at all times. Pray without ceasing. Give thanks in every circumstance, for this is God’s will for you in Christ Jesus.
1 Thessalonians 5: 16-18
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