If you are a speculator, the extreme situations currently in play in
the broad stock market (95% of the way to a potential ‘triple top’
scenario price-wise, and 80+% of the way time-wise) and the gold market
(impulsive price drops amid growing concerns that the bull is dead
despite rising money supply data) as of March 1, 2013 are the situations
that you wait for.
In short, pivot points are the place to deploy capital (either to the
short or long side) for big gains. The stock market has been on a
cyclical trend for 4 years and a secular, mostly sideways trend for 12
years. Gold has been in cyclical downtrend for 1.5 years and a secular
uptrend for 12 years. That is all well and good but trends can be a
grind, filled with ups and downs, stops and starts.
A big macro pivot point on the other hand can be a career maker – if
you can catch it at the right time after correctly gauging its
potential. This is no easy task. If it were we would all be mega rich
due to our amazing ability to call the markets. Unfortunately, the
markets have a great way of throwing curve balls that not only have a
wicked spin on them, but also burrow down hard and in. Maybe it is
heavy sliders that the market continually throws, maybe it is sinkers.
Whatever it is, our bats are often sawed off just when we think we are
dialed in to a grand slam.
So moderation and risk management are what we should practice most of
the time. It sounds boring, but when a big pivot comes, you will be
glad to be in position to capitalize on these rare events. As an
example, people who had cash in 2008 and 2009 were afforded the
opportunity to buy all sorts of assets on the cheap, beginning with the
precious metals, then key commodities and finally extending out to the
2008′s deflationary destruction was a contrarian macro pivot point as
this Time Magazine cover with its depression-era bread line photo said
all anyone needed to know about what the play would be.
And then came Tony Robbins sometime in 2009 warning the public about
the dire consequences of the new depression and the rest is history. A
cyclical bull market was born of too much doom, gloom and certainty by
the public that the world as we knew it was over.
Dial ahead to today and we find the estimable Time Magazine asking…
What does this tell you? Does Time know what it is talking about
this time or is it just reflecting the public’s view of the world back
from mirror into which it dimly gazes?
Time Magazine published photos of breadlines and headlines reading
“Depression 2.0″ at the very beginning of the current cycle, at exactly
the time people should have been buying. Today, just below a
potentially profound macro pivot point Time seriously
ponders a “great rotation” into stocks. Sure, they could get it right
this time. But what do you think are the odds of that?
You see, you have got to think for yourself if you are going to
effectively practice what is necessary to succeed over the long-term in
the markets. No analyst, guru or newsletter writer should be followed
in a passive manner. How do you know they are not just trend followers,
doing what is comfortable; doing what seems to feel the best and make
the most sense at any given time?
It seemed to make the most sense to be bearish in early 2009. It was
time to be very bullish. It seems to make sense now to be bullish now
because it feels good and the apparent dangers are dissipating as policy
makers assure us that they remain benevolent and in control. They are
not in control, but it has been a long, hard battle for the formerly
embattled Ben Bernanke to be given the respect of his predecessors. He
now has it.
Just look at his smug self-satisfaction. The benevolent hero in full
control. We will continue to work on a macro pivot for sometime in
2013 until given reason not to. In 2008 I became bullish on the gold
sector first, then in early 2009 there was crude oil, copper and soon a
Pandora’s box of asset markets giving contrarian bull signals. That was
a macro pivot.
Today we should look out ahead to gauge the possibility of its
opposite becoming engaged before too long. I believe the bloodbath in
the precious metals may be a precursor to something profound. The PM’s
did after all, lead the great cyclical bull market dubbed here as “Hope
For profound events to work for you in any sort of a good way you
must be prepared for it. Being prepared means opposing psychologically
powerful forces like the will of the herd, which probably comprises
90-something percent of the people. It is harder than it sounds.