You gave me an idea and i write a post about it, but the important thing is this:
You neet a trendline break and an accumulation phase where the market wont go down if a bad news comes. And finally you need a trigger event when the majority of investors says at the same time: oh yeah this is.
In the beginning of 2023, you had a trendline break an accumulation phase for a few month and cpi was declining for a few month. And then you had a bad nfp and ism service data and everybody new at the samw time that the inflation problem is solved.
The same goes for smaller correction. Usually you have a reason for a correction, so for finding the bottom you need a counternews which negates it.
Completely agree with your thesis and that most investors are caught looking elsewhere. I have also posted about this but from a more philosophical view (closer to fundamentals). My guides. 1. Charlie Munger “show me the incentives and I’ll show you the results” < Big Money and market makers are incentivized to get people to invest no matter what; 2. Crist on Value analogue, that investing (like horse betting) is a parimutuel endeavor, to win you must pick NOT the best investment (horse) but the investment (horse) most mispriced to win. Also the market makers/Big Money always collects its vig (wins no matter what) and a zero sum game for everyone else. 3. Play the (biggest) Player: like at a poker table, levels of thought to figure out what Big Money is thinking as they move the market.
Great article. How would you go about thinking that markets have bottomed ? Flipping whatever makes markets or stock overvalued does not equate to undervalued.
You gave me an idea and i write a post about it, but the important thing is this:
You neet a trendline break and an accumulation phase where the market wont go down if a bad news comes. And finally you need a trigger event when the majority of investors says at the same time: oh yeah this is.
In the beginning of 2023, you had a trendline break an accumulation phase for a few month and cpi was declining for a few month. And then you had a bad nfp and ism service data and everybody new at the samw time that the inflation problem is solved.
The same goes for smaller correction. Usually you have a reason for a correction, so for finding the bottom you need a counternews which negates it.
I approach this that way.
Thanks very much for sharing
Completely agree with your thesis and that most investors are caught looking elsewhere. I have also posted about this but from a more philosophical view (closer to fundamentals). My guides. 1. Charlie Munger “show me the incentives and I’ll show you the results” < Big Money and market makers are incentivized to get people to invest no matter what; 2. Crist on Value analogue, that investing (like horse betting) is a parimutuel endeavor, to win you must pick NOT the best investment (horse) but the investment (horse) most mispriced to win. Also the market makers/Big Money always collects its vig (wins no matter what) and a zero sum game for everyone else. 3. Play the (biggest) Player: like at a poker table, levels of thought to figure out what Big Money is thinking as they move the market.
Great article. How would you go about thinking that markets have bottomed ? Flipping whatever makes markets or stock overvalued does not equate to undervalued.