There is a story I once heard about the 1972 bear market.
This was historically, during the time, the 2nd biggest decline in the S&P 500 in history and the beginning of the 1970’s secular bear market.
The story goes..
Technical analysis at the time was a fairly new idea. It was the concept of finding patterns in peoples behavior to be a predictor of future movement in individual stocks. There was a portfolio manager who hired a market technician during this time to get an idea of where stocks might go based on past movement.
One morning, the week of the bottom of the market, the market technician is reporting to the portfolio manager. He throws his arms up and says, “NOTHING! There is nothing you can invest in! Everything is going down!”
The purpose behind that story is more figurative than literal. The figurative message behind this is that nothing looks good in a bear market. Everybody gets shot in the end, including the generals.
Serving in the United States Marine Corps…
Has offered me a unique perspective during times of intense stress. Usually, as the battle wages on and stress becomes high, I become calmer. I am not saying this to mark myself as some sort of unique individual but to emphasize a characteristic that is instilled into our nations warriors. It is an ability to operate under the fog of war.
Many individuals will talk a big game, saying, “I would do xyz” during a moment of extreme stress. In the financial markets we often hear, “If the market crashes, I am totally going to buy the F—k out of the dip. It’s always been a good idea.” But once the fog of war dawns upon them, they retreat to safety.
My time in the Marine Corps has taught me that a majority of the time, this is just talk. During moments that truly test your resolve and character, a flight to safety and comfort is in human nature. Few will do what needs to be done when the moment calls.
Why on earth am I relating the fog of war to the financial markets?
It is Often in Moments of Chaos that Clarity is Found
Today, nothing looks good. From Macro outlook to today’s economic picture, it’s cloudy at best. Talks of a secular bear market are beginning to make its rounds around the market and I am beginning to see and feel that many investors are folding under the pressure. Here are two YouTube videos that I have recently watched that validate this thesis:
Jeremy has been bullish the entire year and is now saying he would like to raise cash on the next rally
MeetKevin talks about retail capitulation
Both are multi-millionaires in their own respect and have amassed a following I don’t think I will ever see. They have done extremely well for themselves and I have nothing but the utmost respect for both. But, it was fairly obvious to see that Jeremy has never went through a true bear market and Kevin was always more of a real estate investor turned day trader for the sake of his channel during 2020 & 2021.
I am Not Trying to Bash These Two, I just Find them to Be the “Voice of Retail Investors”
The key take away is in regards to capitulation. It is extremely hard to watch your investments go down day after day after day after day.
The Point I am Trying to Make
“When it comes time to buy, you wont want to”
Everything has a price from the job you work, to the love you give/get, what you buy and the investments you make. Everything in this world has a price. Oftentimes, that price is not measured in terms of dollars and cents but in terms of effort, time and dedication. In the case of the investor, it’s measured, of course, in volatility.
The delayed gratification mindset of investors has been the single strongest characteristic of history’s greatest investors. It is the ability to step in, think longer, and buy when everyone is selling.
NO, I am not pumping stocks and saying you should YOLO all in Margin and Call Options. I am saying that using history as our guide, we will make it through this and those that ran toward the fight won the battle. The ones that ran away will never see the rewards of victory.
In 2008, SPX went from 1300 in mid August to 900 in early November, as I recall. THAT was painful, and it makes me wonder why I’m reading so much everywhere, including on FinTwit that this is the worst Bear Market ever. I dunno, doesn’t feel that way to me. And I saw what you are talking about above. Retail investors were clamoring to get out. In March 2009 I had a long time client come to me and say “just can’t take it anymore, sell my stuff and close the accounts.” This is what we always see at bottoms. Doom.
I can’t help but wonder if that’s where we are now, or at least close. Even though the charts (and FinTwit) say otherwise.
Just my two cents
Hi Dillon, I lost connection with your discord channel. Can you please send me the link?