The current generation of investors has two significant issues to contend with:
- They have never experienced a substantial pullback of any type, let alone a bear market.
- They depend on emotional support animals to make it through everyday life.
Both of the above factors play into the hands of the market in a myriad of violently barbarous ways that are yet to be determined.
What is concerning in the near term is that the sages that have the hearts and minds of investors are treating this pullback as if it is a routine event that should be treated as an opportunity. All the meanwhile the equity markets are putting on a demonstration of sheer violence that hasn't been witnessed for quite sometime. The overwhelmingly bullish opinion of the sages and the characteristics the equity markets are demonstrating are in stark conflict with one another.
In every single case I have witnessed this type of conflict it is the equity markets that end up winning. They do not relent in violence to the downside until the so called voices of wisdom either go silent or turn bearish. Chief market analysts comforting investors by telling them that "panic is not a strategy" simply doesn't happen at market bottoms of any substance.
Investors are therefore in a precarious position for the remainder of October. A vast majority of investors feel that earnings will be their savior while being comforted by a general underpinning of complacency that doesn't seem to be shifting regardless of how hard the market is pressing the downside. The resolution to this type of conundrum for the markets is twofold:
Create volatility that is so abhorrently vile as to completely strip investors of their mental fortitude to continue AND/OR create such continued downside so that investors tap out completely.
In the first scenario, the losses are much more contained, however, it takes much longer. In the latter scenario, it can be over before the end of this month.
In either case, October is shot for the bulls.
Allocate accordingly.
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