DANGER: The World Is Now On The Verge Of The Largest Destruction Of Wealth In History

Trader Scott’s Market Blog
This is the title of a recent interview at King World News. While I remain as bearish as anyone on the global economy, one of Scott’s axioms is: Economics do not equal Markets.

Meaning it’s a huge mistake to believe that you can have outstanding market performance, nor even average market performance, by “getting the economic picture right”.

There is a cadre of well known, “respected” and brilliant ( admittedly much smarter than I am) economists, analysts and writers who are oft quoted claiming doom is upon us.

And the one thing that they all share is they’ve been horribly wrong about MARKETS for YEARS. To paraphrase Donald, they’ve laid a YUUGE egg, they’ve been a real disaster.
Markets move on the basis of one thing and one thing only: LIQUIDITY aka SUPPLY and DEMAND.

And understanding this should form the basis for all market judgement of future price movements; i.e. TRENDS.

My own method, which in large part is taken from the work of the brilliant Richard Wyckoff, involves understanding how price and volume interact with each other; i.e. LIQUIDITY.
While I do currently have (for now) a very large investment position in US Bonds, (which I bought 16 years ago), that is where the crash is very likely going to occur. However it will occur very slowly at first,

as Sovereign Bonds are by far the biggest market in the world. Therefore, they TREND for decades, but the PROCESS of forming major bottoms and tops takes many years to unfold.

Precious metals will be a major beneficiary. But it’s ridiculous to claim that they will be the only beneficiary. The stock market will also be a major beneficiary.

I have repeated so many times over the years (check the archives): The stock market is NOT in a BUBBLE and it’s not even close to it.

While I absolutely would not buy stocks now, I expect to begin accumulating stocks

into one of the next big selloffs. And I will write about some parameters for that in an upcoming blog post.
Also, a major beneficiary will be commodities, especially agriculture. Please check the archives for my thoughts on that.
But this time, as opposed to the 1970’s, I expect real estate to lag the previously mentioned markets by a significant margin. And that has to do with the difference in where we currently are in the forever ongoing cycle between debt creation and debt destruction.
And lastly, I do agree that currencies as a whole are not pretty. But I currently am very bullish intermediate term on the US$, where I continue to hold a very large position.

I am looking to add to that position into $ weakness.

So which side are you on? Do you think that “It’s the Same Old Song” or do you say that “I’m a Believer”?



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'Trader Scott – DANGER: The World Is Now On The Verge Of The Largest Destruction Of Wealth In History – July 12, 2016' have 2 comments

  1. July 12, 2016 @ 2:11 pm Dave

    Scott
    All these points are very well taken but I’m not reading anyone who is talking about the fifty percent devaluation of the dollar that is likely to take place in the next 10 years. That and taxes will make a break even investor look pretty sharp.
    Dave

    Reply

    • July 12, 2016 @ 3:42 pm Scott

      Fair enough Dave, but I didn’t say break even. I said average. And in the world that you’re implying (and certainly possible), average would probably equal consistently negative. Outstanding means to me always a very positive number with a minimal/fractional
      “maximum drawdown” ( meaning: http://www.investopedia.com/terms/m/maximum-drawdown-mdd.asp). While consistently negative returns should never be acceptable. And I am well acquainted with consistently negative returns, as I was one of those “losers” for my first three years in this business. Outstanding traders could care less about the overall market environment, as that is something which no individual has any control. So the FOCUS should always be what we do have control over. And that is a well researched method in which experiences thru many, many “battles” has given us total confidence in our chances to survive.

      Reply


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