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January 12, 2025
Repeating some previously
stated impressions…
MY VERY DISTINCT FEELING REMAINS THAT EVERYBODY IS
LONG EVERYTHING…that everybody IS “in,” and all hopped up on Nvidia, Chip
Stocks, AI, Crypto, Gold, etc.…and feeling all but certain that owning any, or
all, of these markets is almost a “can’t lose” situation…That, at a minimum,
“You gotta have SOME chips, AI, Crypto, Gold and/or
Silver…” Otherwise, you’re gonna miss out!”
And that mindset has the masses, in NYC and alike, seeing any recent weakness
in these areas as “pullbacks,” and potential “buying opportunities.”
You tell me…Is that an accurate characterization of current
public opinion or not? And if it is, where else does that bullish attitude
originate but from Wall Street’s FOREVER WRONG brokerage house analysts and
internet squawking heads? I mean, when it comes to trading & investing, do
you really think that even 1% of the public is actually doing their own deep
dive investment research, TOTALLY independent of what they see in the media? Or, aren’t 99% of Americans making ALL of their
investment decisions based on information and opinions that New York’s
supposedly expert “strategists” are touting as being relevant to what stock
prices will do? For sure, every investor wants to make their own
measured, reasonable and logical decisions about what
to do with their money…but one more time…Where does 100% of their “relevant”
information, facts, metrics, opinions, etc. originate?
As I have noted before, I spent my first 11 years in this
business with a major brokerage house (Merrill)…and was fully exposed, up close
and personal, to a herd of blueblood analysts and “specialists,” and
subsequently left there to start Croker-Rhyne, to put it mildly, with a VERY
low regard for Wall Street’s supposed “experts” and their ability to predict
anything. Believe me, being an analyst only means that the company designated
you as such, and NOT because they’ve determined that you know ANYTHING about
where prices are heading. And for the majority of them, they don’t. They’re
just well spoken, well dressed guys in suits.
And do not think that I am sitting here saying, “They are
basically all stupid and I am smart.” Not at all…I can be terribly wrong about
this stuff but I DO get it right often enough to have
some credibility…They are “right” maybe 5% of the time?
TRACKING THE BROKERAGE
HOUSES’ ANNUAL MARKET PREDICTIONS SINCE 2000
And yes, you’ve seen the table following before but here is
the latest update…and FACTS are FACTS…
One year ago, in December 2023, just about every
brokerage house on Wall Street was predicting that stocks would go nowhere to
lower in 2024, with their average guess being that the S&P would finish 1.2% higher. As is their historically and almost
perennially wrong norm, the S&P 500 ended the year 23.1% higher.
Even though they occasionally come close with their
stock market predictions, as I have documented for years, they ARE usually way
off the mark, to the extent that if they say “Buy!”, you’d better be
selling…and vice versa.
I urge you…Just go year by year and note what they predicted
and what the outcome was…And then remember how wrong they usually are for as
long as you remain an investor…And believe me, this extends beyond stocks to
Bonds, Gold, Commodities, CRYPTO, and really, just about any piece of
paper, or symbol, that rolls across those TV and Internet screens.
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Wall Street Strategists Year End S&P
Targets |
Actual Year End S&P |
Wall Street Estimated
S&P % Gain or Loss |
Actual
Year End S&P % Gain or Loss |
How
badly they missed. Net difference |
|
2000 |
1525 |
1320 |
+3.8% |
-10.1% |
13.9% |
|
2001 |
1593 |
1148 |
+20.7% |
-13% |
33.7% |
|
2002 |
1291 |
880 |
+12.4% |
-23.4% |
35.8% |
|
2003 |
1004 |
1112 |
+14.1% |
+26.4% |
12.3% |
|
2004 |
1169 |
1212 |
+5.1% |
+9.0% |
3.9% |
|
2005 |
1246 |
1248 |
+2.8% |
+3.0% |
.2% |
|
2006 |
1348 |
1418 |
+8.0% |
+13.6% |
5.6% |
|
2007 |
1550 |
1468 |
+9.3% |
+3.5% |
5.8% |
|
2008 |
1632 |
903 |
+11.1% |
-38.5% |
49.6% |
|
2009 |
1078 |
1115 |
+19.3% |
+23.5% |
4.2% |
|
2010 |
1225 |
1258 |
+9.9% |
+12.8% |
2.9% |
|
2011 |
1371 |
1258 |
+9.0% |
0% |
9.0% |
|
2012 |
1344 |
1426 |
+6.9% |
+13.4% |
6.5% |
|
2013 |
1534 |
1848 |
+7.6% |
+29.6% |
22.0% |
|
2014 |
1955 |
2059 |
+5.8% |
+11.4% |
5.6% |
|
2015 |
2233 |
2044 |
+8.5% |
-0.7% |
9.2% |
|
2016 |
2216 |
2262 |
+8.4% |
+10.6% |
2.2% |
|
2017 |
2362 |
2683 |
+4.4% |
+19.8% |
15.4% |
|
2018 |
2854 |
2506 |
+6.4% |
-6.8% |
13.2% |
|
2019 |
3056 |
3262 |
+22% |
+30% |
8.0% |
|
2020 |
3333 |
3756 |
+2.2% |
+15.1% |
12.9% |
|
2021 |
4098 |
4766 |
+9.1% |
+26.8% |
17.7% |
|
2022 |
4965 |
3839 |
+4.2% |
-19.4% |
22.6% |
|
2023 |
4031 |
4716 |
+5.0% |
+18.1% |
12.9% |
|
2024 |
4780 |
5882 |
+1.2% |
+23.1% |
21.9% |
|
2025 |
6653 |
|
+13.1% |
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Do note that some of those bad calls are truly
horrendous…And that they predicted NONE of the big down years…NOT EVEN CLOSE.
And so, a year ago they all thought the market would
go nowhere and it rose 23%...And now they are looking for 2025 to be up 13.1%,
ranking that as their 5th most bullish projection for the past 25
years…? Put that together with my own unbiased perception that “Everybody is
long everything,” and for me, it raises some BIG RED FLAGS.
Be Short the Stock Indices
In spite of all the hoopla about Trump supposedly being positive for
stocks and the economy...and with EVERYBODY all hopped up (FOMO) on Chips, AI,
the next Nvidia, etc...And with the forever Wrong Way Brokerage Houses
entering 2025 the most bullish they have been in 15 years...ALL OF THE STOCK
INDICES ARE BACK TO WHERE THEY WERE LAST JULY???? For sure, the markets
can turn back up from these NEW LOWS…but I cannot help but view this as
anything but BEARISH.
I have no idea of where we will be a
year from now , but I think some big part of 2025 will be severely
disappointing for investors…that stocks ARE primed to go nowhere to perhaps
seriously lower…Ditto Crypto (how many of you actually USE it?)…and especially
ditto GOLD.
Still Shorting Gold
A few months back (Nov 1) I referred to “Buy Gold” as the
most unanimous and popular idea on planet earth…as symbolized by the following
headline, and my comment, from right before the election…
Nov. 1, 2024
Surefire Bet? I can’t think of any statement more dangerous than
that in trading…Or in the words of one of the world’s most famous traders,” If
it’s obvious, it’s obviously wrong.”
And
what has happened since…
You want to be bullish Gold? Unless I am missing something,
I would point out that, among Wall Street and all the talking heads, ANY bearish sentiment regarding Gold is still
virtually NON-EXISTENT. And maybe I’m wrong, but the markets do NOT reward
jumping on unanimous band wagons like this…Quite the contrary…And this market,
to me, has TYPICAL GOLD CRAPOUT AHEAD written all over it.
I THINK THE INITIAL DOWNSIDE
TARGET HERE IS UNDER $2200…AND IN A HURRY. That’s the way this market trades
guys…Fundamentals are meaningless here…This market is always about sucking
everybody in due to “bullish fundamentals”…and then
ripping their heads off.
Even though experience has
taught me that NOBODY ever wants to short Gold, here is my recommendation…
And I will repeat that I believe
we have seen the highs in Gold for YEARS to come…
YEP…STILL SHORT CATTLE
And everything I’ll show you
here is why I will not be out of this trade…and why I think it is so, so big…
I still think this is
absolutely the biggest trade on the board…that if I could put on one position, and go lose my self in
South America for a year (as I did in 1987-88 with long $1.50 Corn), this would
be it.
No matter how strongly I
believe in a idea obviously
does not mean I will be right, and if I am wrong it will certainly mean losing
money…But my true view here is that every current Feeder Cattle
contract on the board will drop by at least 25% during 2025, which equates to
about 65 cents, or $32,500 per futures. The past year of essentially
sideways action has been costly to me, but that does NOT mean the next 12
months will be. I WILL NOT BE OUT OF THIS TRADE.
HOW FEEDERS TURN…and HOW
THEY DO GO DOWN.
One more time, here’s what
their 14 declines have looked like…basically straight down…during the past 20
years…
And if you’re thinking, “I’ve already seen these,” I’d
suggest you go back and refresh your memory…
And do KNOW that there was absolutely NOTHING that came out
at each of these practically overnight reversals that told you, “This is it.
Get short now!”
Do note how many times there was just one more NEW HIGH…and
then it was OVER…usually within a day or few…
These are all “life of contract” charts…from the day they
first started trading until their expiration month…WHICH REVEALS THAT, HOWEVER
BULLISH ALL THE TALK WAS AT THE HIGHS, NOT ONLY THAT THEY ALL WENT VIRTUALLY
STRAIGHT DOWN…BUT ALSO THAT 11 0F THE 14 MADE NEW CONTRACT LOWS…
I have to keep reminding you that at just about every top in
the history of commodity trading, there was NOTHING out there to suggest that
the game was over…And I mean that…NOTHING…which in itself implies that, in the
media, there is ZERO logic to hang a bearish opinion on…BUT, when the whole
damn world is thinking “Up!”, it DOES change/affect the behavior of everybody
who either uses, produces or trades that commodity, to the extent that 100% of ALL OF THE BULLISH FACTORS
AFFECTING THAT MARKET DO GET FULLY ACCOUNTED FOR IN THE CURRENT PRICE…AND
BEYOND THAT, THE FUNDAMENTAL SUPPLY-DEMAND EQUATION FOR THAT COMMODITY DOES
FLIP WHEN ALL OF THE REAL WORLD BUYERS HAVE BOUGHT AHEAD…AND ALL OF THE REAL
WORLD PRODUCERS HAVE SOLD “NOTHING” AND ARE HOLDING PRODUCT THAT DOES HAVE TO
BE SOLD (ESPECIALLY WHEN IT’S A LIVE ANIMAL THAT COSTS YOU MONEY EVERY EXTRA
DAY YOU HOLD IT).
I do NOT see some sort of quiet, smallish, meandering move
lower…So I think all of these options are absolutely viable ways to go about
doing this…
Yes, I have been on this for a long time
but I THINK THIS THING IS FINALLY PRIMED AND READY TO GO…that you GET POSITIONS
ON HERE AND THEN JUST WATCH IT HAPPEN…and it’s working, just keep all those
straight down histories in mind and just sit, sit, sit…
Buying the Canadian Dollar (again)
We were on this last summer, under basically the same
conditions, and got a relatively fast, but short-lived 250
point rally…before beginning a descent into even more extreme new lows…
Because
this is the same trade, just at lower prices…Here is what I wrote then…
August
17, 2024
What
I’ve written forever is that major price changes in all of the markets are
mostly a function of traders getting in…and GETTING OUT of markets…of the
trading masses chasing ideas to the point of totally overloading the boat on
one side of the market…and then having to “flee” as the trade goes wrong…And
specifically, in today’s world of fund driven MONSTER bucks sloshing around the
markets, an almost common occurrence has become seeing all that fund
money unanimously pile into a trade, and then suddenly find it necessary to
exit…again, in MONSTER numbers…when “everybody is in,”…and that market
makes what I’d say is an almost inevitable reverse…and the losses start
mounting. And simply stated? When you have a TON of money gone
wrong, EVERYBODY GETTING OUT IS WHEN
YOU OFTEN SEE BIG PRICE
MOVES…as, believe me, markets DO tend to move a lot faster when the FEAR
OF LOSING MORE MONEY is the driving force in making trading decisions…
And all
of the above describes what exactly what I see in the Canadian Dollar again
today…just more so.
These
first two charts present the undeniable case that “everybody” is HEAVILY Short
this market…INCREDIBLY SO REALLY…and about, I think, to get it handed to them…
And this next chart is just astounding to me…
Last August we got a pretty much straight up 250 point rally…that obviously was not the low in this
HISTORICALLY SEVERELY LOW currency. And my perspective here is that the odds
have skyrocketed that what we’re about to see is the Real Deal…that the next
upturn starts and absolutely does not stop a month later…With this in mind,
where a 500 point rally would make a lot of money (or lose a lot if I am
wrong), this would still only get the Canadian back to the recent highs…and all
things considered, the odds for MORE than that, I think, have also gone way up.
Maybe I’m wrong, but I think all three of these are here and
now…Call me if you’re interested…Or just to give me feedback?
Thanks,
Bill
770-425-7241
866-578-1001
All
option prices in this newsletter include all fees and commissions. All charts,
unless otherwise noted, are by Aspen Graphics and CRB.
FUTURES
TRADING IS NOT FOR EVERYONE. THE RISK OF LOSS IN TRADING CAN BE SUBSTANTIAL.
THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT
OF YOUR FINANCIAL CONDITION. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE
RESULTS. THERE IS NO GUARANTEE YOUR TRADING EXPERIENCE WILL BE SIMILAR TO PAST
PERFORMANCE.
The author of this piece currently trades for his own
account and has a financial interest in the following derivative products
mentioned within: All of them