This newsletter has been delayed by at least 2 weeks,
mainly due to the fact that all my graphs from two weeks ago had to go to the
bin because they became irrelevant. The stock market fools everyone, even when
you think you`re on the right side. Just like surfing a wave, it can`t last
forever, you ride it for a few seconds, drop out, and wait for the next one. If
you think you can surf a wave all the way to shore, good luck.
December has been a party for the bears. Just as I
predicted, it became a red Christmas, and it took the entire Trump staff to
talk the indexes back up. “quantitative tightening will stop”, “a deal with
China is on the way”, ongoing stimulus from the ECB and BoJ; all this news has
pushed markets up way more than I, or probably any other bear, would have
expected.
This is the reality of bear markets however, and as i`ve
shown in the previous newsletter, the up-moves in bear markets can be
incredibly nasty. To be even more clear: the biggest rallies don`t take place
during bull markets; they take place during bear markets.
In this newsletter I will try to explain what has
happened over the past month, and why I think that this has not been the
“shortest bear market ever” as some people are now stating. It is merely a
rally based on hope and “fake news”, coming mostly from the inventor of that
same expression.
I expect February to continue its way down. October till
December was mostly a technical correction, this January was mostly a
headline-based rally, and February will start off with the most important
narrative: weak fundamentals.
Fundamentals don`t change in a span of a month. The
fundamentals that i`ve been describing over the past 6 months have been built
up over the past 10 years—sometimes even an entire
generation—and it will take a long time before we will return to normalcy.
Buckle up, it`s gonna be a bumpy one. This is month
number 4 of the correction, i`m looking at the entire 2019 to continue its way
down. Do remember though, that markets never go down in one direction. I`ll
show you a few charts that can easily depict if a bear market has moved “too
fast”, and when it`s time to take a breather (or time to take revenge, if
you`re a bull).
Enjoy the
ride, and don`t forget to stay positive after reading this newsletter, this too
shall pass!
Robbert-John Sjollema
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.