In a post Thursday (“Road to Nowhere”), Tim Knight wrote,
With the exception of commissions-based brokers, it’s hard to believe there’s anyone out there who has really enjoyed the stock market over the past few months. I mean, just look at the ES [S&P e-mini futures] below.
Tim Knight still thinks the S&P’s going to decline to 925 or 930 within the next couple of months, informed by his 1937-1942 historical analogue, so he’s positioning himself accordingly.
Tim’s racked up some spectacular returns in the last few years, which lends weight to his analysis. Another point in favor of further market declines in the near future is the reversion inherent in a secular bear market. But, ultimately, even if you are confident we are in a secular bear market (as I am), timing the cyclical market trends is difficult. Which reinforces a thought I’ve had that a good default position during a secular bear market is to be market neutral (perhaps leaning a more to the short side as a cyclical bull rally starts to look long in the tooth, and leaning more to the long side after a cyclical bear rally looks like it’s running out of steam). So I plan to put more money to work in pairs trades going forward.
Related posts:
- The method to my madness In the course of a conversation with Matt today about...
- Comparing secular bear markets Via Tim Knight, interesting chart from Martin Pring: ...
- Hedging in a secular bear market One problem with some of the conventional wisdom regarding investing...
- John Hussman echoes Robert Cray (and Vitaliy Katsenelson) Not verbatim, of course — they write in different idioms...
- Dinosaurs choking on comet dust A comment I left on Josh Brown’s post about value...
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