Dampening Volatility Attracts Dumb Money

in #investing2 months ago

Hey Jesspeculators

Financial markets are a cock-up, to say the least, as more people lose their jobs and work from home they're looking at ways to earn additional income in the financial economy.

Passive investment vehicles have also grown so large that in many cases they are the market, the dumb money is so big that even active traders can't complete to try and keep it on a more manageable course like in years gone by.

Then add to the fact that governments have stepped in to buy toxic assets, provide liquidity and keep you have a recipe for the meme "number go up". Anyone who is anyone with a Robinhood account is now trading stocks and options, and because they can't seem to lose as the number goes up, they think they're freaking geniuses.

Remember when the crypto bull market run in 2017 and you saw all these random influencers coming out of the weeds shilling any shit coin because when BTC is on a rampage anything remotely tethered to it, NUMBER GO UP!

Dumb money loves number go up, that's all they need to know to be sold on a coin, a stock, a course, a video number go up bro.


Markets make no sense

Over the last 40 years since we've moved off the gold standard, volatility in markets have gone one way down, why? Because NUMBER GO UP!

When you're backstopped by QE and when the largest investment vehicles or price agnostic trying to make a 7% return, it's only going to eat up any volatility.

This momentum has taken apart value investing and dividend-yielding stocks, who wants that when I can make made gains trading options or buying stocks to dump later. It's crazy t think that the options market is now far bigger than the underlying stock, even when 80% plus of options all expire worthlessly.

As volatility remains low in financial markets, and interest rates non-existent, so there is no risk-free rate for money, people are treating stocks and options as if they are the risk-free rate.

You can only delay volatility you can't destroy it

While most traders are now focusing on the snapshot of the way things are now, no one is looking towards the greater business cycle. Much of the smart money is now being parked in risk-off assets like gold and a few bonds and cash waiting it out as nothing seems worth it in an overvalued risk-adjusted model.

Once volatility returns to the market it's going to be brutal it's going to correct in ways these traders have never seen before, all their paper gains will be wiped out as their current strategies are no longer applicable.

So when people talk to me about Bitcoin being volatile, I at least feel it's more honest than the sedated fintech 1.0 markets and that I'd rather have the ugly truth then be sold a beautiful lie.

Trading becomes a feeling

Just like any skill you practice trading becomes a feeling, as you you get burned as you win, your mind starts to capture these patterns, and they start to become familiar to you.

When you're conditioned to a sedated market, you feel that one with volatility is strange, yes this is the state of the world we're in, everything is topsy-turvy, but that's okay.

You can only hold back volatility for so long before the whiplash returns.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

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Markets make no sense

If we fully understood it that there will be no scope for making profits, Everyone knows everything no body will sell in loss and nobody will put money in that.

When market is constantly rising , everyone is successful trader.

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Lol you make a good point if we were all super efficient there woild be nothing to exploit markets can and will make losers of us all

lol thats so true just look at all these so called stock tradeds on Youtube latelt since the market is backed by central babks uou cant lose so they all think they are geniuses

Trading becomes a feeling

If a trader read this phrase and understands it completely then he will come out as greater trade and lose less money!

Posted Using LeoFinance Beta

It’s like riding a bike and anything you do it becomes a part of you the more you do it if you just going to wait for swings to jump in you never going to learn

It’s all about those boring trades learning to take small profits and being comfortable trading, understanding the tools, the jargons and ensure you’re not overpaying for trades either

It sure does become a feeling over time

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