“The wise” said they wanted a reduction in the rate of interest rate increase, .5% instead of .75%. They got what they wanted. Apparently, what they really wanted was “better than expected”, the “expected” being .5%.
So, this morning, “the wise” stampede to the downside.
Steve
Happy to report this thread did not age well.
It turns out there has been absolutely no change of heart on these other forums I frequent. Still rampant gambling fever and the certainty that big money is about to be made.
The main difference is half of them are going to bet downwards for a few days instead…
The other half, of course, just got wiped out.
I can now quantify some aspect of the ‘gambley-ness’ of the markets in 2022.
Gambling using ‘0 day to expiry’ index options increased in 2022 to record levels far above peak bull market 2021, as a proportion of total options traded.
44% of SPX option volume had LESS than 24 hours to maturity.
Indeed the frenzy is so intense that this year 0DTE trading has been added for Tuesdays and Thursdays as well, because waiting up to 48 hours for your ‘investment’ to mature is a ridiculous burden on the emotions.
That is actually pretty funny.
Talking of wipeouts. Bullish gamblers just got annihilated. And I mean Annihilated! This week. I wonder what the impact will be for the next few weeks till their paydays…
Most of those sorts would be on margin. A payday wont help.
They’re not using margin.They (by which I mean nearly 100% of the younger investors I know) are using short term options to get uncallable leverage and to limit losses. Every payday, they get a fresh batch of cash to buy new options with.
Just curious what age bracket are we talking?
20-40, typically 25-35
my boomer father is conservative and outside of AAPL not sure he has owned much tech, is happily retired managing his own money for a couple decades now. yet he seems, to me, slightly optimistic. Or at least he was when I last spoke “market/stocks” with him in the Spring. I remember thinking “this whole sucker gonna crash really hard” and that it reminded me of 2000-2002 or 2008-2009, but he wasn’t bullish but rather seemed to think it would blow over soon.
I think this is why he had a different view:
I did note that he had more cash than usual, so he wasn’t blind either.
Contrast this conservative boomer to the GenZ/Millennials who grew up, investing-wise, in 2015-2019 and throwing darts yielded such good returns that they all felt they should start paid newsletters on twitter it seemed.
Covid hits, but is so lightning-quick with the V-shape that they all follow their buddies on reddit and elsewhere, and with no sports to placate their gambling fixation, they all jump into the stock market while stuck at home.
And everything just worked. Up and to the right.
Repeated positive reinforcement.
20x P/S ratios that once seemed outrageously expensive were now practically cheap!
What’s this other thing over here? SPACs…sounds great…jump in at the launch and watch your money 2x or 3x immediately…no-brainer!
How about meme stocks like GME and AMC? Pile on, bros…we going moon!
Tesla? Sure…let’s just make it a $1T mkt cap.
Crypto? Wait…seriously…we have an entire new ecosystem of “stocks” we can buy, and boomers are clueless?? ALL. IN. BRO.
NFTs? So, like, a jpeg sorta, but if we say it is worth $3m it just is? Totally makes sense.
In the Sales industry, I often comment that people “sell what they know” meaning they do the thing they are most comfortable with, most knowledgeable or familiar with, and what has worked before.
You have to be really really punched in the mouth to sit back and change your way of thinking. Does the young 20-something selling Amway or some other multi-level-marketing scam understand they are on a road to nowhere until they run out of money and their friends and family stop talking to them? This is a timeless lesson and as true now as it was in the 80s/90s thru today (my only frame of personal experience).
When I first joined TMF message boards in 1999, there were a lot of cocky posters, many even apparently retiring early, due to market run-up of mid-90s into bubble peak of 1999 thru March 2000. Just pure geniuses (in their minds) like the Earth had never seen the likes of before. Across all market sectors, too. Biotech, Gorilla Game, etc etc…
I was busy with a small business and less invested in stocks in 2008-2009, but I am sure people got cocky again leading into 2008. I know the real estate folks sure did.
Final point: the “punch in the mouth” I refer to hasn’t yet come, because it has been such a slow bleed all year. Down 20%? Will bounce back. Now down 35%? Will bounce back. One day you wake up down over 60-70% and you get to a point of wondering why you should sell now as it will just pop back to “normal” the minute you do. And so you hang on.
In early 2009, the mouth had been punched. I remember S&P was at lows, and again I wasn’t invested as much in market then, but a work colleague that I respected, who seemed above-average intelligent and sufficiently “worldly” made the comment that “the S&P will never recover from this”. I had long learned not to argue watercooler talk about religion/politics or the market, so I just walked away after mumbling something neutral-sounding. In my head I was thinking “but this is the time to buy”.
So when you hear acquaintances stop looking to BTFD and instead declare capitulation, that is probably a good buy signal.
Dreamer