2009-2012 Provided a Roadmap 6/20/2021
NQ at the daily view.
Back in summer 2020, I mentioned that inflation would be coming. It's here now. That said, this is short-term inflation. The M2SL (money supply) might be vertically up. However, the M2V (velocity of money) is also almost vertically down. You need both of them up to cause runaway inflation. In an analogy, that's like having a lot of gasoline (money supply), but your fuel injector is broken. So, not much fuel is actually going to the car engine itself. Another analogy is like having the fastest internet service, but your router or modem is breaking down. In addition, think about how the inflation from the CPI reports were measured. They were comparing May 2021 to May 2020. What were we doing during May 2020? Lockdown. We were not spending much at all. That's like comparing an athlete running today to where he was in ICU. Most of the inflation has been in slower moving items too like cars and houses. Think about it from a supply and demand perspective too. If smelters, metal workers, and lumber workers were laid off during 2020, how fast can you hire and train a workforce to provide materials?
These are things that the crowd does not critically think about. For example, semiconductors were viewed to be inflated or raised due to Trump tariffs. How many people know that Taiwan has been facing one of its worst droughts in its history? Taiwan and Hong Kong are where we get our semiconductors from. It takes 2200 gallons of water to create 1x 30cm wafer.
Now that the inflation talks were here, I sold off all of my banks and oil stocks 2 weeks before June OPEX. Quarterly OPEXs are usually the focal points of volatility. That and I was never comfortable being in the same trade as the herd. Everyone was talking about crypto in May. That was my cue to cash out my Ethereum, Bitcoin, and Cardano. Now, everyone is talking about inflation and not understand its concepts. That was my cue to get out of inflation protective trades.
Why am I like this? Permabears like to say that we are in 2007. In actuality, we are in 2009-2010 all over again. Why do I say that? Let me walk you my first years of trading/investing with the articles below.
2009 by the New York Times. economix.blogs.nytim.../28/inflation-fears/
2010 by NYT. economix.blogs.nytim...r-of-falling-prices/
2010 by Forbes. www.forbes.com/...ows-an-economy/?sh=1cff9ac...
2011 by CNBC. www.cnbc.com/2011/02...ons-of-All-Time.html
2011 by Reuters. www.reuters.com/arti...dUSBRE85414520120605
2012 to 2017 by NYT. www.nytimes.com/2017...thats-a-problem.html
Have you noticed the similarities to today? I remember every single mistake I made by following the crowd and the clickbait of media back then.
I mentioned back in winter 2021 that 2021 will be the year of disappointment. Permabulls don't get their miracle returns like in 2020. Permabears won't get their crash that they need to breakeven. It's due to sector rotation. What we are seeing now is seasonal volatility. February-March, June, and September are seasonally the most volatile months. This downward movement will likely be short-lived. It's why I cashed out 2 weeks ago.
Now that everyone is talking about inflation and chasing "inflation protection," what is the next move? If history rhymes like it did in 2009-2012, I'll be looking to get back into big tech by the end of June.
Back in summer 2020, I mentioned that inflation would be coming. It's here now. That said, this is short-term inflation. The M2SL (money supply) might be vertically up. However, the M2V (velocity of money) is also almost vertically down. You need both of them up to cause runaway inflation. In an analogy, that's like having a lot of gasoline (money supply), but your fuel injector is broken. So, not much fuel is actually going to the car engine itself. Another analogy is like having the fastest internet service, but your router or modem is breaking down. In addition, think about how the inflation from the CPI reports were measured. They were comparing May 2021 to May 2020. What were we doing during May 2020? Lockdown. We were not spending much at all. That's like comparing an athlete running today to where he was in ICU. Most of the inflation has been in slower moving items too like cars and houses. Think about it from a supply and demand perspective too. If smelters, metal workers, and lumber workers were laid off during 2020, how fast can you hire and train a workforce to provide materials?
These are things that the crowd does not critically think about. For example, semiconductors were viewed to be inflated or raised due to Trump tariffs. How many people know that Taiwan has been facing one of its worst droughts in its history? Taiwan and Hong Kong are where we get our semiconductors from. It takes 2200 gallons of water to create 1x 30cm wafer.
Now that the inflation talks were here, I sold off all of my banks and oil stocks 2 weeks before June OPEX. Quarterly OPEXs are usually the focal points of volatility. That and I was never comfortable being in the same trade as the herd. Everyone was talking about crypto in May. That was my cue to cash out my Ethereum, Bitcoin, and Cardano. Now, everyone is talking about inflation and not understand its concepts. That was my cue to get out of inflation protective trades.
Why am I like this? Permabears like to say that we are in 2007. In actuality, we are in 2009-2010 all over again. Why do I say that? Let me walk you my first years of trading/investing with the articles below.
2009 by the New York Times. economix.blogs.nytim.../28/inflation-fears/
2010 by NYT. economix.blogs.nytim...r-of-falling-prices/
2010 by Forbes. www.forbes.com/...ows-an-economy/?sh=1cff9ac...
2011 by CNBC. www.cnbc.com/2011/02...ons-of-All-Time.html
2011 by Reuters. www.reuters.com/arti...dUSBRE85414520120605
2012 to 2017 by NYT. www.nytimes.com/2017...thats-a-problem.html
Have you noticed the similarities to today? I remember every single mistake I made by following the crowd and the clickbait of media back then.
I mentioned back in winter 2021 that 2021 will be the year of disappointment. Permabulls don't get their miracle returns like in 2020. Permabears won't get their crash that they need to breakeven. It's due to sector rotation. What we are seeing now is seasonal volatility. February-March, June, and September are seasonally the most volatile months. This downward movement will likely be short-lived. It's why I cashed out 2 weeks ago.
Now that everyone is talking about inflation and chasing "inflation protection," what is the next move? If history rhymes like it did in 2009-2012, I'll be looking to get back into big tech by the end of June.