As we blaze through the first month of a new year filled with equal parts angst and optimism, there seems to be very little that will dull the appetite of investors for speculation in nearly anything with the perception of value.
Be it sports memorabilia, commodities, vintage goods or stocks, if it fluctuates in value, then odds are there is appetite for it. Anything works, except for holding onto eroding wads of cash that serve no purpose other than incremental depletion of value on a seemingly perpetual basis.
In the midst of this celebration of crisis era capitalism, brought on by seismic shifts in the economic landscape of the past century, anecdotal data points continue to appear that suggest the fondness for speculation may have crossed the line from holy into unholy grounds that threaten to unleash the oversized fists of the market gods, causing tremors that few are prepared for.
Now lets me first explain that while the theme of this note may seem generally bearish in tone, as an investor, you very simply cannot buck the present bullish trend.
What I am attempting to express here is that the comfort with which most are approaching this market, as expressed through leverage in its various forms, will lead to a period of exhausting volatility, be it short lived or otherwise.
The violent nature of this market suggests that investors should be looking for evidence of such an event, as it will be the key to outperforming both the markets and peers in 2021. In other words, unlike 2020, 2021 will not be a year where you can simply grab nuts and buy whatever is going up. There will be consequences for acts of juvenile barbarism that few are prepared to face.
In 2021, thus far, I have received numerous inquires that go something like this: My god, my friends are making so much money in the markets. I cannot sit this out any longer. What's the best way to get involved?
This one was an insta-classic: My 10 year old wants to start trading options, what brokerage firm do you suggest for him?
And then there are the more refined individuals who simply ask for advice on recent IPOs that they have no idea about, but like the symbol or the fact that it trades in the triple digits right off the bat.
While anecdotal data often times is early in nature, in this circumstance, use it as a means of refraining from grabbing both of your nuts while you dive into the most high octane driven stocks, perhaps instead choosing to only grab one, while you shield the other in case things don't work out.
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