Its Over, page-374

There is this saying TINA (there is no alternative) , that is to say that as long as interest rates remain low, the opportunity cost of investing in stocks is low because the alternative e.g a term deposit does not even cover inflation, hence money would stay invested in stocks either for dividends/capital gains or both. Housing market exuberance is now gone, so money would probably go back into stocks , looking for bargains. And a rally into the new year may be possible after another 5-10% fall, but it may not take us back to the year's high and perhaps 2019 would be sideways to lower as we see pre-recession signs starting to show.

The other aspect people should consider is the considerable amount of share buybacks US corporations have been doing over the last few years fuelled by ultra low interest...yes, US corps borrow at 0-1% to buy back their shares so their EPS can rise instead of real strong earnings growth so their CEOs can get their fat cheques. And no one is complaining because the party goes on. But when the buying stops as rates rise, retail buying cannot be a substitute for corporate purchases and demand for stocks would be anaemic. The other factor is the rise in the US dollar (again fuelled by rising US rates) which cause a setback to many US corps who receive bulk of their earnings abroad (outside of US), the likes of Caterpillar etc.

I will continue to share my insights as we approach the Big Kahuna....no one can anticipate when this would come or we may be close to the doorstep. But the time to act is now. Being ahead of the curve is of utmost importance. As of last Friday, the % returns from Covered stocks was 7.35% against -6.5% if the positions were not closed, and that is a 13.85% difference.