for sure Jimmy08 - as simply as I can without posting a long run of hard to read stuff....
pre-emptive in my terms is a knee jerk reaction to a general market shift in the underlying macro economic conditions that may alter prevailing conditions...
what are they in this case?
inflation raising its head - potential rate hikes to counter those purchase cost increases and supply chain cost pressures
that means cost of money goes up
have wages moved to match that potential 'cost of living 'increases...nope! yet big business keep banking record profits YoY ??? odd hey....how many more billionaires were minted on the back of the pandemic stimulus...? plenty on the web....and good on em .....not a whinge in any way - just an observation
combine this worrisome situation with the Fed announcing all government market stimulus will be removed by the end of March 2022
this ( and other contributing factors) is causing what i see as a pre emptive correction - markets generally under these circumstances marginally readjust through over bought sectors and taper down to a level the market thinks is matched to these changed underlying macro conditions
Duration - couple of weeks best case to couple of months worst case without damaging losses generally speaking ( of course that statement is broad acrsoo global economies and markest - the individual investeor / speculator might bear a larger proportion of the ' re- adjust' )
evidence to back this up?...sure
“For example, the stock market correction in February and March 2020 from Covid-19 lasted about three months. Meanwhile, the correction in September 2020 only lasted three weeks.”Once the economic shock or big political development that may have caused a correction runs its course, markets or securities generally recover and continue heading higher. But not always—since 1974, five market corrections have turned into bear markets.' (Forbes)
that last line is the one I'm more concerned about ....corrections that pre-empt a bear market ....
only five since '74....true to say we have been riding a bull market ....hell yeah - the Fed stimulated it.....now they are turning off the tap
Overdue bear market - a 20% plus decline across the stock boards signals a bear market - generally speaking 'fear' of more substantial change in the underlying economic fundamentals ( just like a correction but more substantial) of a sector specifically of many sectors together lead to a 'cash conversion' revaluation of, as i mentioned 20% or more ....... that is entirely possible imo....
and that is the event that has me more concerned.....
I'm not spruiking an opinion that is appearing now - its been on my radar since November 2019.....pandemic has added fuel to my position/opinion in this regard,
as the Fed stated in Jan
this next few sentences are highly controversial and of course open to interpretation .....
get out of your diversified position and pick the best 2 or 3 that have performed well during the last few minor corrections - they will be the most resilient imo
diversified portfolios are nonsense because there aren't that many winning companies who will return you big wins.....its a nonsense - at best they provide average returns / who invests for average returns? or to be simply average? ....they will however hurt you more when ( and if ) the 20% revaluation occurs
some sell on uncertainty and buy back when things are improving in those 2 or 3 performers - that's an average strategy for similar reasons - cost you more when you buy back in for less holding that then requires 100% at that point to return you to break even .....
nuts imo
Weebit is one of my 3 that I speak of.......the market opportunity and management team combined with the nature of the disruption it will cause = $$$$ and a correction or bear market will only fuel / increase the value of this equation....I wont sell a single share - others will and tha'ts fine - remember this is my view only
@Jimmy08important to restate these are my view entirely and are not advice in any way - simply a conversation to perhaps add valuable context to the general overview ....
good luck all - weebit heading for the winners circle imo
(20min delay)