Last week must have been the most insane week, in the most insane quarter since 2008. We still have 1.5 more weeks to go before the end of the year, but it already looks like it`s going to be a red Christmas.
The most amazing part about the declines over the past weeks, is that the S&P 500 has “only” lost 10+% so far. If you look at previous bear markets, there`s lots more downside, with a decline of 40% almost being a base scenario. Yet it already feels like the world is collapsing from underneath us.
There`s a few reasons for this. First of all, the US has been the last man standing. The rest of the world is much worse off and has already been in bear market territory for a while. For all the other countries aside from the US, the world is actually collapsing from underneath them, and serious cracks start to appear in their economies.
Second, there are a few industries that are leading the declines, and are in much more pain than the rest. The main example would be the tech industry, where the once beloved FAANG stocks are now suddenly the most hated stocks.
What does surprise me though, is that there has not yet been a specific “trigger” for the declines. Yes, the China and US trade relations are terrible, but last week it seemed that this issue would be fixed very soon. Corporate debt hasn`t blown up yet, there is no BREXIT vote, the FED hasn`t made a decision yet about their interest rate policy, employment rates seem to be stable and consumer confidence is still high. The Brexit bill vote and the FED interest rate decision will definitely shake up the markets even more than they already have in the past 2 months, and I would like to warn all the readers of this newsletter for more downside ahead, with massive spikes in between that make it look and feel as if “the worst is behind us”. But don`t fool yourselves, the average bear market takes 18 months to develop, and so far we`re only in month 2.
Over the past 4 months I have prepared you for what`s coming. I`d highly suggest to read all 4 newsletters to understand the “triggers” to this stock market decline, because if you would only listen to the mainstream media`s narrative, you`re at least 6 months behind. The “everything bubble” is slowly deflating and it is now up to us to either profit from it, or to try to get out of it at the right time.
Enjoy the ride, and don`t forget to stay positive after reading this newsletter, this too shall pass!
The information contained in this publication is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed in this publication is that of the publisher and is subject to change without notice. The information in this publication may become outdated and there is no obligation to update any such information.