Why You Shouldn't "Hope" for Bear Markets.A lot of the underlying TA analysis to support this is contained in my other post about the 4.23. It's recommended you read that first to understand context.
Click below;
This isn't an analysis post. In this post we won't be dealing at all with the idea of if you should expect, plan for or take steps to protect yourself against bear markets. We're going to focus solely on the fact some people really want it. They want it bad. You can tell by how extremely excited they get whenever there's even a mild hint it will happen.
Some people think I want this. They say the funniest of things. The amount of times I've had someone say something like, "Don't worry there will be a crash (some variation of "But when I say so" usually goes here) - which silly concept. The idea I "Worry" there will not be a crash. That I have a thesis in which millions of people get hurt, but at least my idea was right.
If you understand the scope of things that happen in a true bear market, to think this way is very shallow and selfish. People are liable to lose everything they worked their whole life for. Families losing security. Kids can end up on the streets. It's a dire tale - and to hope for this to happen just so you can say "Told you so" is a terrible way to be.
There are two good reasons as a trader you may want the market to go down.
1: Volatility. Markets get faster on the downside and if you're good, that means more money.
2: Benchmark beating. Unleveraged it's hard to beat SPX in an uptrend. Pullbacks help, a lot.
Both of these are now what I'd consider largely invalid reasons. They were good ones to have before but now we have massive volatility on both sides. We're inside an expansion of volatility which will likely continue whether we go up or down.
On benchmarking, it's important if you're in the asset management game but at this point you should be so far ahead of the benchmark that it's irrelevant. Good active traders at this point should be streets ahead of passive investors and passive investors should not even know it because we're back at highs and they think that means they have optimal performance. What they think doesn't matter, you can show people with money your results and being so far ahead of the benchmark greatly benefits you.
At this point in time you can be suitable ahead of the benchmark on a risk adjusted basis and have the prospect of heading into hyper volatile markets where you can make a fortune on either side. And if you're not in this sort of situation, you're not going to make a lot of money in a bear market - anyway. You probably have too strong a leading bias on the bear side which has led to you round tripping gains and even in a sustained bear market this same thing will happen in the bear market rallies.
A prominent reason some people hope for a bear market is simply want to see bulls fail. It seemingly annoys them no end to see other people doing well by doing something they think they should be punished for. While they often won't outright admit this, it's clear in the tone of how they speak. The way they celebrate any time someone bullish might have maybe lost some money - and they are eager to tell you how they are going to go broke in the next leg.
This is a bad way to be. In life. You should not be too bothered about what other people are doing. How they get on with that. And you should not expressly hope people fail and suffer just because they have a different idea of market analysis from you. It's not a healthy way to be. It's bitter and caustic - and that isn't stuff you want to cultivate as personality traits.
You can spot people who are like this easily. They'll generally dress it up as "Warning people" but it's not warning people when you cheer and jeer if the bad thing happens to them. That's called "Gloating" and if you were really interested in the helping of people, you'd not gloat. Indeed, the bad thing happening to them would be consider a failure on your part. Your warning sucked and no one listened.
When it becomes stupidly obvious what motivates these people is when the market goes up and they get mad. If this happens, you're not "Trying to help". You are hoping they will fail so it validates yourself in some way. Which is bad ... You want to address that and find a way to validate yourself without needing others to suffer for you to have "Told them so".
If the 4.23 thesis is correct them whatever way to market resolves there's liable to be a mega trend. If you're in the game to make money - which way is better. Up or down?
It's up. Clearly. Because when the market goes up your risk is contained to things like fraud and malpractice with your counter parts. You bank and broker are only going to go under if something extremely shocking is unearthed. In a downside market, it only takes one thing to have a problem and through the magic on contagion all of your banks and brokerages now have a problem.
You know what problems with banks and brokerages mean? They mean you put effort into making money you might not get. It's not the thing to be "Hoping" for. Is it?
It's really dump, to be blunt about it.
When you drill down into it the two main reasons people want a bear market are they don't like seeing bulls succeed and they want to be able to say they got it right. That's the bottom line with most bear forecasts. And you can always tell because they'll be upset if the market goes up.
The other is basic ideology of how markets "Should act" but this is basically just hoping the bulls fail and also generally totally detached from the reality of how markets have always acted. Markets have never acted "As they should". Never in 200 years. Why show up now and moan about it?
These things are all entirely non important. When you weigh them against the known outcomes of bear markets. Millions of people suffering. Risk to financial structures. Increased chance of slippage and gap events in the market making it hard to understand and control risk. Just so you can "Be right". Or just so people you don't know can suffer because they did something you didn't do and you're not happy that went well for them.
At the risk of repeating myself ... not a good way to be.
There used to be a bit of a good reason when it comes to social media because sites like this have become increasingly less useful/interesting as the uppy markets continue. More and more we have the future knowers that will insist you use their ideas. You may not even discuss your ideas. If you do, you should be mocked and branded as .
While a solid bear market would bring an end to this we'd run into a couple problems. One - the bears would take their place. We seen this at the April lows. When I posted bull analysis at the April lows bears showed up with all the same tone and noise of bulls when you post into resistance. Like the bulls, if they're right they come back to tell you how stupid you were and if they're wrong you'll just not see them again until they're right. Where they'll come back to remind you how stupid you were, even if you've already banked profits on all your ideas at this point.
This is mildly annoying but it's not the sort of thing that you should pick global disaster over. All you have to do is just not read the comments. Granted .... the fact you have to post analysis that's the popular idea here or you should not bother reading the comments because it's be full of childish nonsense isn't ideal for social networking. It doens't make these kinda place "Fun" places to be. But it's better than the wipe out event.
And now even the wipe out event will not significantly improve the content one should expect. It used to be the case if there was a wipe out event then most of the people posting would be -people who have some deep experience trading either side of the market and can offer insightful ideas.
In the previous drop we seen how this will play out now. People will not know what they're talking about but rather than let that slow them, they'll just get ChatGPT to write the post for them. And it will be entirely standard and predictable posts. Most of the "Bear market analysis" I seen in April can be duplicated by putting about 6 words into ChatGPT.
If I can prompt ChatGPT and read your post - why would I read your post? I can ask ChatGPT the same thing. Can ask for more detail. Give more context. Chat back and forth about different outcomes. Or I can come to social media and read the same 5 bulletpoints over and over again. It's not hard to see which is more interesting.
So even the idea that we'll have more interesting content from more objective traders is largely out the window now. We'll probably just have generic ChatGPT posts.
"Hey ChatGPT, write me an essay on tips to trade a bear market".
That's how most of the bear analysis in April was written.
All in all, the only two reasons people hope for bear markets at this point is ideology and ego. Both are things you should leave at the door when you enter the market.
Whether it will happen or not is something yet to be determined, but it's not something to hope for.
Although I will say this, if the 4.23 breakout comes I think sites like this will become essentially unusable for people interested in discussing strategy, odds and contingency planning in markets. It kinda already is and it would get much worse. Unless you want to post, "I too agree with the popular idea" you may as well not post.
And if everyone is posting the same thing, you may as well not post.
But these are small prices to pay to know your broker is probably going to stay in business.
