Investor sentiment has fundamentally changed post-COVID and it’s going to take a MAJOR market correction to revert it back to what I would consider normal. Until that happens we will continue to face a skewed marketplace that is effectively suffering from an acute bout of futurophobia.
The majority of traders fail for a variety of reasons but one of the biggest is that they keep asking the wrong questions. It’s not that the majority of them are stupid or untalented – I frankly don’t consider myself a genius either. It’s just that their head has been filled with years and sometimes decades of mental trash they seem unable to get rid of.
Let me be crystal clear. Opportunities like these only present themselves once or twice in a lifetime. I am dead serious about this. What is going on in the marketplace right now is absolutely unprecedented. However I would bet you good money that 99% of retail traders are completely unaware.
Look I just want to get in front of any potential rumors. No I did NOT kill John McAfee. I didn’t even know the man personally. And just because I recently spent two weeks up in the North of Spain does not mean I hired some local goons to have him snuffed in his prison cell. I mean – sure, I COULD have. And he did after all welch on his bet that BTC would hit the $1M mark by 2020.
If there’s one thing I’ve learned in my illustrious career as an all purpose market megalomaniac then it is this time tested rule: Right when I’m getting heaps of frustrated calls and nervous emails from friends and clients – that is usually the bottom.
Just a quick crypto update since my workload has been relentless since I got back from vacation. Bitcoin is exhibiting classic trading range behavior. Up-down-up-down. Choppy, hard to read. Pressing all of our emotional buttons.
If I had to name the number 1 mental hangup that is preventing retail traders from being successful traders then it would be the constant need to be proven right. It’s a pernicious mental trap that has wiped out a many trading accounts. Unfortunately just like gravity or bad customer service in Spain I don’t see this changing anytime soon. And don’t think I am excluding myself either – quite to the contrary.
Implied volatility over the past few weeks has managed to blue-ball me worse than my first high school date. At least back then I finally got lucky on the third turn. But this attention whoring bitch tease of a market just keeps on making hot promises and then never puts out. That at least until yesterday afternoon when the FOMC – unexpectedly – put some fear of God into what has become a long term manic depressive but short term over complacent marketplace.
Miss me yet? For once my timing with going on vacation was spot on as the marketplace shifted into park and has done absolutely nothing since I left Valencia. Which for the record is exactly how it should be. On my end it’s been an eventful but mostly relaxing time in my little alpine paradise in the North East of Spain.
Here’s a little tidbit you won’t ever see mentioned on CNBC. The longer markets remain range bound the more gamma risk continues to build up. Which is something you ought to be very worried about, even if you are not an options trader per se.