Mood Trumps Trump

Did you know that stars only look brilliant
because we tell them to? That clouds are
the sky’s way of hiding the shame of its accent?

—Ray McManus

You read the news, carefully, I hope. I stare at charts to get a handle on what’s happening. Here is what I see:

I. Business is loaded with debt

II. But, suddenly, lending has fallen off the cliff, usually a precursor to a crash in the economy

III. This, right at the time investors are once again all in with stocks

The papers are full of “reasons” why the market has to go up from here. The wonky fact is that social mood drives prices in a pattern that conforms to the Elliott Wave Pattern in the market. Best bet is that there remain a few more squiggles and a new high in the Dow Jones Industrial Average and then it’s over and a bear market of generational severity ensues in the global financial system. Social mood will be down for decades and, after much loss, the papers will have “reasons” for it all.

Social mood is the unconscious herding instinct, very hard to buck. A colleague of mine, an old timer like me, says “I see what you see, Rod, but I don’t believe you!” That’s cognitive dissonance. He remains long the market (fully invested). I’m in cash, not short yet, but any day, now…

Cheers,

Rod

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