Walk Street is on rinse and repeat cycle
Wall Street has been wary of being bearish for one reason, and no, it's not the Federal Reserve: They have been waiting for retail--the individual investor-- to go all-in stocks. After 13 long years, this moment has finally arrived: retail is all in.If you doubt this, just look at record highs in investor sentiment, margin debt and the Buffett Indicator Current valuations are so extreme that the previous extreme in the 2000 dot-com bubble now looks modest in comparison. The real driver of retail going all-in is the complete collapse of risk / moral hazard: the Fed will never let the market go down is not a meme, it is an article of secular faith, supported by 13 long years of ceaseless Fed intervention / stimulus, all in service of elevating the stock market. In this secular religion, just buy the dip and rotate into what's hot, and the millions just pile up on their own.
What the newly minted millionaires don't understand is they're the marks and bagholders. Wall Street has been patiently waiting for retail to go all-in so the pros can sell all the over-valued stocks to the euphoric, trusting retail traders, who will continue to buy the dip and rotate into the next hot meme-stock until their fortunes have dwindled to spare change.
The con requires euphoric confidence that stocks only go up forever, and every retail trader is confident in their ability to ride the wave to riches. We're finally at that summit of euphoric confidence, where faith in the Federal Reserve is literally a religious experience.
That's how accounts are destroyed, and the wreckage isn't just financial. The scars of being a bagholder can last a long time. But Wall Street is patient, and a new crop of bagholders eventually catches Fed Fever, and the transfer of over-valued equities to a new generation of bagholders will play out according to the same script.
What the newly minted millionaires don't understand is they're the marks and bagholders. Wall Street has been patiently waiting for retail to go all-in so the pros can sell all the over-valued stocks to the euphoric, trusting retail traders, who will continue to buy the dip and rotate into the next hot meme-stock until their fortunes have dwindled to spare change.
The con requires euphoric confidence that stocks only go up forever, and every retail trader is confident in their ability to ride the wave to riches. We're finally at that summit of euphoric confidence, where faith in the Federal Reserve is literally a religious experience.
That's how accounts are destroyed, and the wreckage isn't just financial. The scars of being a bagholder can last a long time. But Wall Street is patient, and a new crop of bagholders eventually catches Fed Fever, and the transfer of over-valued equities to a new generation of bagholders will play out according to the same script.
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cs goh : In other words, we are leeks waiting to be raised and harvested...
chingchonglinglong : @Tupack H McsnacksWhat are your thoughts on when you would foresee the wreckage playing out? Talks about the “upcoming crash” have been around for the past couple months but every month the indexes just seem to climb higher to new records.
Mcsnacks H TupackOP chingchonglinglong: October has the highest chances of any large pullback or crashes.
moolele : Just looked at my pockets… I am pretty sure retails are all in already. Lol.