Sunday, October 16, 2016
Central Bank policies continue to power most hated bull market ever
Every single year since 2009, the total money committed to dividends and buybacks has increased, and we believe that they will continue to grow at this crazy clip and could even gather momentum when negative rates finally debut in the U.S. Translation, this bull market is not going to hit a brick wall yet. This market will experience corrections along the way ranging from mild to strong, but each one will prove to be a buying opportunity. The amount of money that will continue to hit this market is going to increase in the years to come and not decrease.
On the psychological front, no bull market has ever ended without mass participation. The masses have not embraced this market and more importantly the sentiment is decidedly negative. Bull markets end on a note of joy and the masses are nowhere close to joyful at present. The latest AAII sentiment survey illustrates that 25% of investors are bullish.
Many experts will state that this is unsustainable. If you apply the rules of logic, that assumption would be pretty accurate. However, reality ceased to exist after the Fed decided to knock out any aspect of free market forces. The Feds control this market, and it will crash when the Fed stops supporting it. Chances of that taking place anytime soon are next to zero.
The global elite are going to throw everything at their disposal to stop any market clearing events from happening. When this thing ends and it will end there are going to be hundreds of millions of very unhappy people. In the mean time you can hide under a rock or you can continue to make money knowing full well that you are standing on a trapdoor and you have no idea when it will open.
Having correct position sizing and a stoploss strategy is one way to limit ones risk while still being able to take advantage of central bank largess.