Think This Madness Can’t Continue? Think Again!

Here’s a slap for every pro in the money business who has been calling for a sell-off for the last 10 years. Believe me, there have been more than I can count.

In case October didn’t already prove it to you, the market is one crazy place. And if you think you have it figured out, I’d immediately go to cash. I guarantee that you’re wrong.

But really, the pros, the self-appointed know-it-alls of the money world, the talking heads – you know who I mean – have been so wrong for so long that it has become monotonous.

Their prognostications since the collapse back in 2008 have been around 20,000 points in the wrong direction. That’s how much the market moved off the bottom of the 6,500 area since March of 2009.

But what’s really embarrassing isn’t that they were that far off. It’s that their private discussions – not the stuff they make public, but what they really think and share between themselves – have been off even more.

The conversations I have had with many of them have been to the tune of “I wouldn’t touch this market,” “I’m sitting on a ton of cash just waiting” or, my favorite, “This is madness. It can’t continue.”

Most of those calls were made immediately before and after President Trump was elected as things really took off.

But you can’t fault them entirely. It has been something of a magical ride that will have a very tough finish, as anyone who has been around the money business for more than a few years knows. But that’s what markets do: They sell off.

The pounding we took in October is a clear sign that they are half right. We can’t go up indefinitely, so you had better keep those trailing stops in place.

But back to the pros. My concern now isn’t that we could fall off another October-like cliff or have another 2008. Nope, my concern is that since we have had a solid sell-off and a big rebound in the last week of October, now all the pros will shift gears and start calling for what I call the “going to the moon” market.

When I hear the kind of stupid calls we had back in 2006 and 2007 of the Nasdaq at 10,000 or the Dow at 50,000 – they actually made them on live TV – that’s when I start worrying.

So for now, it looks like there’s still tons of pessimism out there, and for my money, that’s a big bull indicator.

You have to love the talking heads.

Good investing,

Steve