From euphoria to despair and gloom

“Dying bullish euphoria” is a stock timing strategy from the MI board.

I don’t want to talk about the mechanical angle, rather, just want to report that I have noticed a chill wind blowing across investment forums that are popular with millenial age investors.

5-8 weeks ago, before Nvidia peaked, everything was very euphoric and everyone was chatty, boasting etc.

It started to go quiet about 3 weeks ago, and now comments are reappearing, but rather bearish.

No one is boasting about ‘gains’, no one is talking about bets they’ve made.

Just a few people reporting in crippling losses from options, and fears for the monthly options they still have in play, hoping the drop will quickly reverse.

Interestingly, no one is boasting about gains from buying put options.

“Bull-markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” - John Templeton


There appears to be a ton of money on the sidelines…historically huge sums on money market funds…isn’t that skepticism?

Sure, there is a AI mania…but the downturn in August and Sept…isnt that, couldnt that be seasonal?

Regardless, it seems to be a case of bulls go on offense during some periods…bears go on offense in some periods…Pigs get slaughtered all the time !

There is no such thing as sidelines. When a stock is bought, someone else sold it. And vice versa. They exchange ownership of assets, they swap places.

All that happens when prices change, is that the rate of exchange between different assets (including cash) is changed.

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The money supply is dropping. That is different.

Being on the sidelines would be when you move $100K to a money market fund, park it there and earn 4%. No in-and-out of stocks or buy-and-hold.



Significant short term market health/breadth indicators are all bearish. Several intermediate term signals have been turned bearish by the last week’s action. Including the major asset classes (GTAA) - only Global High Yield and US Large Caps remain above their 8m Moving averages, and Cash is the #2 asset behind US Large Caps.

Tough August and September. Which increases the chance that after the upcoming week the markets will turn around and have another small rally for October, if nothing else for seasonality.

Bullish euphoria is dying, but “e’s not dead, 'e’s restin. Lovely plumage…”


What he meant was the figure was always the same regardless of a market fluctuation. That is not true in a bull market. That is not true in a bear market. The money supply is the issue. It is drying up like it did after Y2K.

Set the oven at 375F and bake for…

It is true that the sum of cash that is in existence/use changes over time.

But this isn’t generally because of people swapping ownership of shares from one person to another.

Every trade has a buyer and a seller, and they swap places.

Varying amounts of people may go and sit on the sidelines, depending on whether small retail or large institutional investors are mostly holding stocks, but the stocks and the cash just change owners.

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For the most part that is very true. Right now that is not true. The FED is out to dump asset values. The wealth effect has to be brought down to reflect an emerging factory buildout prior to the production increasing. The FED is targeting inflation that is unrelated to production yet to happen.

The FED is out to dump asset values.

The FED, inexplicably capitalised, is not famous for its holdings of stocks.

Do you agree that individual trades between market participants do not result in cash ‘moving to the sidelines’? because the amount sold and bought is exactly equal?

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Apparently money in the stock market is like Hotel California. “You can check in any time you like but you can never leave.”

I’m using the lull to do a Roth conversion. I’ll be able to convert a larger percentage of my IRA for the same amount of taxes paid.



Of course, but neither of us believes that buying a property of any sort is a static in-time proposition. My ideas on the money supply come into play as time marches forward.

There’s no such thing as money ‘in’ the stockmarket. The whole point of owning stocks is that you don’t have the money - it’s gone - to the guy that sold you the stocks.

Yep, the cash in an MM or bank account.

The FED usually prints more. That is why this market will fall further. We got to a certain place and now the FED is mopping up the loose monetary policies.

I could care less about a snapshot in time, which ends up being Luxmmain’s point.