I am new to this community and like what I see. I am a recovering Large Cap Growth Portfolio Manager. I used to command Billions of $ at my finger tips and tech stocks were my specialty. Now I am managing my own money and looking for a new gig. I know how the big boys think and how they behave. I am here to warn everyone! The jig is up and we are in the process of topping in this current 5 year Bull Market cycle.
I went to cash in the second week of January. I would like to tell you that I shorted these tech stocks and caught the top. Alas I did not but I have made some money on the way down. What you all need to know is that this current bull market is in month 62 (a new record). The longest prior 4 year cycle advances were both 60 months and were 1987 and 2007. This bull market’s foundation has been built on sand. Corporate profits have recovered due to cost cutting, share buybacks fueled by cheap leverage and government largesse in the form of extended unemployment benefits and food stamps. The multiple that we pay for that unsustainable stream has been provided by the Fed in the form of QE. The earnings are unsustainable and the Fed is tightening and that is all you really need to know. Yes it really is that simple! Don’t listen to CNBC, friends, family or collegues. Tune them out and feel the disturbance in the force. The Fly has mentioned the growth stocks as the canary in the coal mine. I believe he is correct. The trend is changing and what worked for you in the past is obsolete. Go from buying the dip to shorting the rallies.
How low do we go? If we are in a secular bear market, which I believe, then it is likely we take out the prior low of 666 on the S&P. I am not joking. There are two ways we get there: either a crash over a few months or a prolonged 18 month decline with a final push down.
Also, the large cap growth fund boys are like deer in headlights with Mo stocks. They are still long Mo for the most part. The price declines in Mo have come mostly from buyer exhaustion, hedge funds delevering a bit and some margin calls. Yes there are some stocks that have crashed already. Do not go bargain hunting! The real liquidation has not occurred yet. The sheeple look at the DOW and see it hitting new highs. I truly feel bad for most people. They do not know what is coming.
We could push to news highs for a brief period of time but I believe the market top is in or near.
I will post additional thoughts later on why this market set-up is eerily similar to the 1929 top. I am short AMZN, FB and own puts on IWM and DIA. I only have a third of my capital committed. Once the trend change is technically official I will go all in.
If you enjoy the content at iBankCoin, please follow us on Twitter