12/2/2014 – An up day with the Dow Jones up 101 points (+0.57%) and the Nasdaq up 28 points (+0.60%).
Very few people are making money in today’s market. Even though most indices are sitting near their respective all time highs, hedge funds, arguable the smartest money out there, are liquidating at the fastest pace since 2009. Bloomberg: Hedge Funds Shut as Managers Struggle in Year of Two Percent Returns
The question is……why?
I believe there are two primary reasons. First, there is nothing to invest in. I mean “invest in” and NOT “speculate in”. Everything is extremely expensive and investing at today’s levels would bring unwarranted/massive risk to capital. Hedge fund managers understand that. Second, the FED has distorted financial markets so much that we operate in an environment where the markets never go down. The volatility is gone (as can be clearly seen with the VIX) and the trading rules that more or less worked over the last few decades no longer apply.
So, who is making all the money in this never ending bull market?
Interestingly enough it is the buy and hold investors who are completely oblivious to where we are today. The very same people who got destroyed in 2000-2002 and 2007-2009. They see today’s valuation levels as acceptable, think we are in the early stages of a secular bull market and believe that every sell-off is a buying opportunity. Mom and pop 401K investors fall into this category by default. And while this strategy has worked over the last few years (thanks to the FED), it is just a matter of time before this strategy/view backfires…….BIG TIME.
Make no mistake, once the market resumes its normal operations, the gains above will very quickly turn into big losses. Just as they did after 2000 and 2007 tops.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2014-2017 will start (to the day) and its internal composition, please CLICK HERE
(***Please Note: Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. December 2nd, 2014 InvestWithAlex.com
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The Shocking Truth Behind Why So Very Few Are Making Money In This Stock Market Google