With the NASDAQ already down 13.5% for January and futures pointing to another 1-2% lower at the open of trade, January of 2022 is turning out to be one of the worst trading months in modern history. Let’s delve into the stats and then I’ll discuss my stratagem.
QQQ Return/ Month/Year
-13.5% Jan ’22
-11.9% Jan ’08
-12.3% Feb ’02
-26% Feb ’01
-17% March ’01
-12% April ’02
-13.5% April ’00
-12.3% May ’00
-13% June ’02
-12.1% August ’01
-15.6% Sept ’08
-11.8% Sept ’02
-21% Sept ’01
-12.7% Sept ’00
-15.5% Oct ’08
-11.5% Nov ’08
-21% Nov ’00
-12% Dec ’02
What do all of those years have in common? DAS RIGHT — bubble bursting recessions. If curious about how I dealt with those fucking tapes, the bursting of the dot com bubble, I wrote two short books about them.
Before I theorize what is going on, let’s review what happened the month following those large double digit declines.
QQQReturns Month following crash
Feb ’08 -4.8%
March ’02 +6.7%
March ’01 -17.5%
April ’01 +17.9%
May ’00 -12.3%
June ’00 +12.4%
July ’02 -8.6%
Sept ’01 -21%
Oct ’02 +18.5%
Oct ’01 +17%
Dec ’08 +2.1%
Dec ’00 -7.3%
Jan ’03 +0.3%
That is what you call heart attack trading. We are in for a severe February either way you slice it. Out of 13 months following large crashes in the NASDAQ — 6 times it fell the following month, losses range from-4.8% to -21%.
The bubble we have been in post 2009 has burst, all thanks to COVID lockdowns and fuckhead stimmy checks. The inflation boogeyman has placed the Fed inexorably in the fag-box, menacing markets with the specter of having to go it alone without the Fed put.
As for me, I closed the session with 70% cash, 13% weighted in FNGU, which will serve me 3x tomorrow. I have reduced my buys from 5% weighting to 2.5% and will reduce it again tomorrow to 1% buys. The idea of nibbling into calamity doesn’t make me feel good, especially if Feb is lining up to thrash us again. I, of course, am simply looking for a decent reflex rally in order to move to cash and reassess. But I might not get that opportune and might need to quickly hedge without bottom ticking the market and ruining my chances at participating in an oversold bounce. The problem with waiting for oversold bounces during periods of truly unique circumstances is you might wait forever.
The Martingale Stratagem might be applied, but I also might apply a fast 15% weighted short to stem the flow of blood flowing from my head.
The prognosis is grim and if we’re looking down the line and accepting what the market is telling us — stagflation is here and we are 3 quarters, maybe 4, away from recession. Under those conditions, kiss your fucking housing market goodbye and subsequent leverage applied to the system — meaning banks, CMBS, leveraged loans, and all of the fat trimmings that go with collapsing of the general economy.
Unfortunately, it appears Alex Jones was right again.
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If they remove Russia from SWIFT; things will become even more unpredictable, if that’s possible.
I don’t know when it was but
when Russia annexed Crimea, Prime Minister Dmitry Medvedev assured the public that removing Russia from the SWIFT system “would in fact be a declaration of war.”
That’s a whole new worry.
If we’re talking stagflation, have a look at the 1970’s bear market. In particular 1973.
Not trading is probably the best trade for everyone who doesn’t write a blog. Patience always wins in the market.
BREAKING: Q4 GDP SURGES BY ALMOST EXACTLY CPI RATE IN STAGFLATIONS LITTLE INSIDE JOKE
Wunderbar
wouldn’t happen if trump was still in place. The guy knows how to inflate assets.
At times like these, many know lots of things
but as far as how all the pieces will interact;
no one knows anything
Jimmy Bowtie is a solid investor but as many of his generation; he owns zero crypto.
His reasoning: if it gets too big, governments will shut it down. Quite a reasonable opinion, as all serious dollar competitors prior to btc were cease & desisted or prosecuted.
I follow Jim’s commodity advice but I’m betting against him wrt crypto.
If all the wheels in the world were destroyed today; by tomorrow millions of new ones would have been constructed. No one can uninvent something so useful.
Millions of uses for crypto have yet to be imagined.
I think there will be consolidation in the years to come, but a year from now I think there will be many more cryptos than today. Just look at forms of money today: USD, Euro, CBDCs, bank accounts, credit cards, gift cards, airline miles, gold, silver, collectables, barter.
We’re gonna find out.
As of 1/26/22
coinmarketcap dot com/ listed 17,151 cryptos
coingecko dot com listed 12,881 cryptos