I’m not here to lie to you.
We’re pretty screwed.
As I type we’re at 1817 on the S&P500. That’s below the neckline of a huge head and shoulders pattern. It doesn’t matter how you personally feel about charts. Incremental selling will be done unless by some hand of God and the Plunge Protection Team we close back above 1850.
In just a couple weeks the market has been kind enough to offer me grist for a brief course in Macke’s Personal Rules for Sell-Offs:
Here’s the core problem with Crude and Currency going crazy, boiled down as far as I can rend it, and why it might lead to the Worst. Year. Ever.
I think there’s a massive underlying problem with balance sheets. Cash has been thrown away buying back shares instead of making improvements in core operations. Both at Macy’s and IBM. Watch for this to become a bigger issue as margins get tighter and all that “cheap” debt becomes more expensive.
Here’s a Crash Survival Guide and some case studies of past misery.
None of which matters because China Has Us By the Balls.
Which reminds me of a story. Two guys are camping. They get hammered and leave some meat sitting out overnight. In the morning a bear is ripping open their tent.
While one guy frantically smacks the bear with a lantern he notices his friend lacing up his shoes.
“You idiot! You can’t outrun a bear!” screams the fighter as fangs sink into his hand.
“I don’t have to outrun the bear” replies the second camper. “I just have to outrun you”.
Point: Don’t try to make money here. Let other people lose money. Then we’ll pick through the scraps.
Stocks are collapsing as I type. My thoughts remain these:
- The S&P500 needs to close above 1850
- It doesn’t really matter where we close because the market is broken. No one will buy stocks when they can wake up to this type of selling every day.
- This isn’t the time to learn how to short.
- If you know how to short, I’m not going to tell you your business. But I will point out that the hugest, angriest, face-rippiest rallies happen in Bear markets. Consider the Fall of 2008:
- Bear markets kill everyone. 99% of investors should be liquid enough to not have night terrors. I’m serious. If you can’t sleep you’re going to puke up your whole portfolio at the exact bottom.
- Respect the Panic. My show is called Panic out of respect, not advice. Sir Isaac Newton blew up investing in stocks. Really. Sir Isaac Newton was super, duper smart.
- There will be opportunity. It will come. I like a lot of individual stocks at their August lows (Come to me at $72, Facebook).
- No one knows anything. I’ve done this professionally for 2 decades. I know as much as anyone who will talk to you right now, on TV or in print, and I don’t know shit.
- This market is a human flesh thresher turned up to 11. Just back away from it and wait.