I would like to share with you a comment from an analyst that seems very appropriate to me at this time…
This past year there are a lot of new people who have put tons of money into the markets. As I’ve shown, there has been more money inflows in 2021 than the cumulated amount over the previous 20 years. It’s really an incredible statistic. It’s also concerning because it’s a market that has bred investors who see no risk and have no respect for risk. None. There is only one way people learn how to respect risk.
There isn’t any research done anymore. People spend more time looking up call options than what companies actually do. Even “professional” traders as we have seen recently don’t even know what companies do. It’s been a year with the meme stocks, crypto, and of course Tesla. If it’s going up people pile in no matter the risk.
Who’s to blame or who’s to take credit for this mania? The Fed’s policies are generally the simple easy answer. The online influencers on Twitter and Tiktok continue to pump everything higher is another reason. We could say corporate buybacks have kept a steady bid on so many stocks. Inflows into passive indexes have also helped lift all boats. The bubble keeps getting bigger and bigger. Small targeted bubbles I probably OK but everything bubble isn’t OK. It eventually robs future years of markets gains when big bubbles pop.
Here we see the situation on the Nasdaq together: today we could score a full 9/9 (wave 2 in place) while APPL has an A-B-C structure that would push the stock on the indicated target
Caution and prudence
