Stock Market Bubble Drivers, Crypto Exit Strategy During Musk Presidency
Stock-Markets / Financial Markets 2025 Dec 27, 2024 - 10:32 PM GMTBy: Nadeem_Walayat
Dear Reader
Counting down to year end and continuing pump into President Musk's inauguration that should see stocks and crypto's pump to new highs, with perhaps First Lady Donald giving us all a twirl on the dance floor.
The Godzilla presidency is coming as the list of countries that President Pump plans to invade and annex keeps growing with each speech, Canada, Mexico, Panama, Greenland, folk may laugh this off now but alls that Trump is doing is giving the green light for the Godzilla monster (US military industrial complex) that is already primed and eager to go on the rampage across the world.
Given what AI supremacy promises to deliver then Godzilla rampaging across the world is is inevitable, with Godzilla's biggest target being CHINA! China should be very worried because whether they want a war or not, Godzilla is coming for them!
My epic year end analysis is under way that will include a detailed trend forecast for the prospects for the S&P in the 3rd year of it's raging bull market all whilst most have been sat on the sidelines waiting for the most expected never to materialise recession of all time to come along so they can buy and likely to give up and FOMO into the bull markets top!
Your analyst wishing all Gong Xi Fa Cai!
Google translates it as "May you have a prosperous New Year"
More accurate translation is - "Hope You Get RICH!"o
Hope we ALL GET RICH on the MANIA's of 2025!
Alls I want is one more bitcoin pump to get to my target of $134k as of Oct 2023 and then I am done with cryptos!
Nadeem Walayat
https://www.patreon.com/Nadeem_Walayat
My most recent analysis - Stocks Santa Rally, Bitcoin Final Pump and AI Stocks Buying Gifts
This article is part 2 of 2 of my extensive analysis that was first made available to patrons who support my work - Stock Market October Correction Window Into Post US Election Rip the Face Off the Bears Rally
For immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $7 per month, lock it in now at $7 before it rises to $10 per month for new sign-ups in the New Year. https://www.patreon.com/Nadeem_Walayat.
CONTENTS
Part 1 - Stock Market Rip the Face Off the Bears Rally!
Presidential Election Year Seasonal Trend
What Does a Strong September Mean for the Stock Market?
Stock Market Up 8 Out of First 9 months
Republican vs Democrat Presidents and the Stock Market
2025 Mid Decade Year
The Risks are to the Upside!
Presidential Cycle - Best time to buy stocks
AI Tech Stocks Portfolio
LRCX Stock Split
META $596
Nvidia 5X to 30X
CEREBUS IPO NVIDIA KILLER?
Never Buy an IPO
STOP LOSSES
In Part 2
CHINA Stocks Short Squeeze
Bubble Drivers
Fourth Reich Carving out an Empire Out of the Corpse of the US Empire
Why the US Empire Would Lose In a War Against Iran
Bitcoin Counting Down To Pump to New All Time Highs!
MSTR No Brainer
CRYPTO EXIT STRATEGY REVISITED
STOCKS BEAR MARKET STRATEGIES
CAPTALISNG ON THE NEXT BEAR MARKET
CHINA Stocks Short Squeeze
The given up for dead and probably most heavily shorted market squeezed the blood out of so called hedge funds with the trigger point being China's direct stimulus of the stock market to the tune of $150 billion the impact of which will get multiplied by at least x5 the amount.
I wrote back at the start of February 2024 virtually at the exact low that Chinese stocks look like they have just capitulated, which did result in a rapid rally that failed to hold however presented an opportunity to trim into and soon followed by another opportunity to buy the dip
China the Worlds Most Hated Stock Market
How's the worlds most hated stock market doing? Chinese stocks! Hang Seng put in a NEW LOW. There are infinite reasons for why China stocks are finished and only one why they aren't which is that they are CHEAP!
Alibaba $72 EGFS +10%, +0%, PE 8, PE Range -15% = Cheap!
Tencent $35 EGFS +21%, +26%, PE 17, PE Range 20% = CHEAP!
Baidu $103 EGF +9%, +18%, PE 10, PE Range-42% = Even Cheaper!
Whilst stocks bull markets raged across the world which further put pressure on the elastic band gap between relative valuations, so it was a case of either western markets snapped sharply lower (unlikely) or china snaps sharply higher as illustrated by the following valuations chart that shows China trading on x10 forward earnings vs the S&P on 23, so less than half the valuation which means there was and still is plenty of scope for the chinese stocks to rally without even taking earnings growth into account which given the EGF's of the likes of Tencent and BABA suggests those stocks at least can x2 of their respective lows.
Furthermore the PE Percent of Range for SSEC is currently at 50%, whilst now no longer dirt cheap is not expensive, with valuations trading at their average of the range,. so again there is scope for further upside.
The primary reason why chinese stocks have suffered so much is because China is turning communist! Emperor Xi Ping cracked down hard on the private sector such as the education sector, as well as the Tech Sector which included making the likes of Jack Mae disappear from public view. This is the risk with investing in China!
Buying the deep dips had gotten me to 160% invested in the likes of BABA which the current rally has enabled me to start the ball rolling on reducing exposure AT A PROFIT! Remember I NEVER SELL AT A LOSS! I would rather a positron go to zero then sell at a loss which has countless times proven to be the BEST STRATEGY! Everyone wants to throw in the towel at the bottom, sell and buy something else, that's what I hear with EVERY stock at their lows! "Nadeem shall we sell META at $100 and buy something better?", my response " I'm adding some more", and it WORKS! All I can do is show you what I am doing with my money and it is upto you to do decide what to do with yours. I never sugar coat thinks, I tell you straight investing is not easy, you are going to have draw downs.
Current exposure is Tencent 119%, BABA 143% and Bidu 163%, so I have plenty of scope to trim chinese stocks as they rally,my plan is to DISINVEST at a profit from chinese stocks as opportunities present itself. Why? for the following two reasons -
1, The US is trending towards WAR with China, and well you don't want to be left holding the bag as happened to those invested in Russian stocks ( JRS name changed to JEMA) where the key lesson is when the invading nation is winning so will your stocks! But when it's clearly stuck in a war of attrition then well, your stocks go kaput which is the experience of investing in JRS.L i.e. I made a lot of profit following Russia's successful invasion of Crimea, annexation of the Donbas but then Putin believed his own hype and blew it all on an disastrous invasion of Ukraine where Russia now faces Ukrainian soldiers occupying chunks of Russian territory that would have been unthinkable but it is happening. That and how drone war fare and AI are giving a huge advantage to Ukraine on the battlefield where US AI identifies and tracks thousands of targets in real time that are then passed onto Ukraine to dispose of by drone attack. So folk want to be out of the BABA's well before the missiles start flying where my best guesstimate right now is during 2028, so there is still plenty of time to ride a Chinese tek stocks bull market to disinvest from at a profit.
2. The CCP dictates what corporations can and can't do, it's not like in the US where no matter what the government announces about breaking up this or that tech giant, as we used to hear about breaking up Microsoft during the 1990's and for several years breaking up Google, NOTHING ACTUALLY HAPPENS! Why? Because the tech giants are STRONGER than the US GOVERNMENT, most of the politicians are in their back pockets and own the stocks so are vested interests! The same is not true in China, where if XI Ping gets out of the wrong side of bed can decide the same day that he does not like the private education sector anymore and thus near over night it's GONE! That is at the core of the problem when investing in Chinese stocks, they have to walk on egg shells and are limited due to lack of freedoms in China, which effectively cripples what they can do in China hence have to go to markets such as the US to do their business to maximise profits and please the CCP by corrupting western youth with tiktok.
BABA the Amazon of China topped out at $305 by $200 started to look appealing to scale into given that during 2021 it and other chinese tech stocks were CHEAP vs US stocks that were busy FOMO-ing into space, typically trading at half the valuation of US stocks, so what does one do when faced with a good stock that has deviated form it's high one starts accumulating, buying the dip, the only problem is Chinese stocks kept dipping all the way to BABA $70 and even that without much of any reactions to the upside to trim into by March 2022. Unfortunately even though chinese stocks rallied into July 2022 this was during the great bear market of 2022, so despite hopeful signs that rally soon also succumbed to the weight of the GLOBAL bear market and thus BABA put in a new painful low of $60 during October 2022, perhaps the new bull market would lift BABA? And yes it did ! All the way to $120, an opp to trim some of what one had bought on the way down $60, however the rally failed to hold resulting in another painful trend towards $60 during which time many threw in the towel and gave up on chinese stocks. However chinese stocks since their January low, that I wrote could be their capitulation moment entered into a weak uptrend, it's definitely not a raging bull market more a trading range of between $70 and $120 which is where BABA currently resides. What have I been doing is trimming some of what I bought around $70, though most of my BABA was bought north of $120 with my average buying price calcing as $136.
(Charts courtesy of stockcharts.com)
Bottom line BABA is CHEAP on the metrics i.e. EGFS +6%, +475%, Dir +21% which are very strong! So it's not surprising that BABA is trending higher, what is surprising is how weak the bull trend is given it's fundamentals which illustrates the RISK that are CHINESE STOCKS! They don't do what one expects them to do! BABA should be rocketing higher, instead it's crawling along at a snails pace so I think it's going to be tough for BABA to break above $120 over the next year or so, still a trend to $120 will give an opportunity to reduce further exposure by which time what happens next will become clearer, i.e. does BABA blast off towards $200 or once more sinks towards it's bear market lows. Currently I am 140% invested vs peak exposure of 160% invested, I imagine by $120 I will be able to get down to about 120% invested. So technically $120 is doable whilst fundamentally $200+ should be doable i.e. looking at the chart, if it can clear $120 then BABA can enter a bull trend that targets $270 though I will have sold out of most of my BABA long before then probably down to about 50% invested by $200 from current 140%, you can see key selling areas on the above price chart.
Tencent has led the trimming way, in fact I have tried to resist the urge to trim too much because Tencent is the strongest chinese tech stock of the bunch and unlike BABA and BIDU my Tencent position is already well into profit. Tencent is currently dancing with $60, with the all time high at $90 could easily be breached during a chinese bull market proper, so whilst I will continue to trim over exposure, I am aiming to hold most until I see a new al time high. This is the benefit of buying falling knives in that one gets to sell into a rising market at a profit whilst others are FOMO buying at resistance and then worry about whether they have done the right thing on the reactions from resistance, whereas when buying the dip one is always buying at the lowest price which is the best one can hope to achieve without the benefit of hindsight i.e you know the stock is cheap and is trading at a fresh low and yes it could get cheaper but eventually it will come good as most good stocks do as I pointed out in early Feb at $35.
BIDU $110 - Buying FEAR!
Baidu had an epic parabolic bull run into Feb 2021 rising from $80 to a high of $360 that it subsequently gave up all of those gains, which illustrates one cannot just buy a stock for x number of years as most think they can, it just does not work that way for most stocks! One has to learn to accumulate when cheap and distribute when expensive, what does it matter if one sold out at Bidu at say $200 rather than anywhere near the $360 high, it's a lot better than giving up all of ones gains all the way back down to the $80 low! This is the best one can do without hindsight, accumulate target stocks when cheap and distribute when expensive, there is no way one had a rats chance of any type of system being able to turn a profit in Bidu as every rally resolved in a new low, so all those come out with their 'systems' fantasising they will get them long in a stock into a momentum driven rally will just keep getting stopped out of stocks such as Bidu, instead accumulating fresh lows and trimming into rallies actually worked DURING the BEAR MARKET.
(Charts courtesy of stockcharts.com)
Bidu is targeting $140 and then $170.
Bubble Drivers
Understand this we are in a bubble that has two key driving mechanisms.
1. QE4EVER as a consequence of the Financial Crisis.
2. Zero Bank reserves requirement as of the March 2020.
These two mechanisms are inflating the bubble towards a final blow off top. Virtually everything that MSM focuses upon such as the Election, Middle East War, Debt ceiling saga and so on are NOTHING BURGERS! All folk need to understand are these two things which are driving asset price inflation towards a Mania.
The depths of the NEXT bear market / economic downturn can only be determined to what extent the Fed makes mistakes because whilst the 1929 stock market crash was inevitable the Great Depression was not! It was in large part due to Fed mistakes, though then worsened by the clowns in Congress with the Smoot Hawley Tariff act that had the exact opposite effect of what they thought it would do! With the US only turning the corner with FDR and his "New Deal" Acts and removing the US from the Gold standard and as was the case with the 1930's if all else fails then there WILL be a World War to boost the economy out of recession.
Fourth Reich Seeks to Carve Empire Out of the Corpse of the US Empire
The Fourth Reich (Israel) is not a friend or allie of the US Empire, the entity is using the US Empire towards it's own ends of carving out a Zionist racist Empire across the middle East as laid out to be the objective by their 1st Fuhrer Theodore Hertz of a "Jewish State stretching from the Brook of Egypt to the Euphrates"
Just as Fuhrer Hitler told you what he was going to do in Mein Kampf so did Fuhrer Herzl.
The Fourth Reich is following the same script of racial purity, the master race, extermination of peoples whom Zionist deem to be Untermensch, today it's Palestinians and now Lebanese, tomorrow it WILL be YOU! Contrary to what most imagine it is the Arabs who are on the front lines of defending the world against the Fourth Reich and what it seeks to do in pursuit of Jewish racial superiority, even though DNA evidence shows it's all built on a LIE!
"Archaeological and genetic data support that both Jews and Palestinians came from the ancient Canaanites, who extensively mixed with Egyptians, Mesopotamian, and Anatolian peoples in ancient times. Thus there are no genetic differences."
https://pubmed.ncbi.nlm.nih.gov/11543891/
Not one palestinian must survive in pursuit of the Zionist great lie! The Fourth Reich seeks to persecute and exterminate Palestinians wherever they be due to the fact that the Palestinians ARE the JEWS of PALESTINE!
How is it in US best interests to gIve unconditional support to a genocidal fanatical racist neo nazi state that is using the US to Build it's own Empire,.
Now the Fourth Reich is taking the the next step in it's master plan beyond committing genocide of Palestinians whom it has kept in concentration camps for 70 years. all whilst playing the victim, now invading Lebanon for the purpose of drawing the Untied States into a war with Iran just as Israel had done with Iraq 2 decades earlier. However, as the Fourth Reich sends it's tanks into Lebanon, no matter the amount of arms that the US supplies, in the final instance the arrogance of the Fourth Reich, self professed gods chosen master race will be it's downfall just as the arrogance of Nazi Germany master race was it's downfall when their invasion of the Soviet Union failed to yield victory, So the Fourth Reich believing it's propaganda of racial superiority has miscalculated the degree to which the people of Lebanon will resist and be willing to lay down their lives to repel the zionist invaders out of Lebanon, so despite all of the odds being stacked against the people of Lebanon, and that the Fourth Reich knows no limits to it's murderous intent, I suspect the people of Lebanon will prevail against the Fourth Reich that has cuck'd the United States into doing it's bidding that sows the seeds for the destruction of the US Empire, as empires that do not act in their own self best interests tend to become over stretched by fighting pointless wars that will only embolden their true rival China to act whilst the Empire has become bogged down in another unwinnable war which is what a war against Iran would be!
Why the US Empire Would Lose In a War Against Iran
Iran will be the Lebanon mistake x10 as the US and it's zionist puppet masters fail to understand that Iran is NOT Syria or Iraq. A history lesson, in the early 1980's Iran was in revolutionary chaos as the Ayatollah sought to reinforce his grip on power after ousting the CIA imposed Shah dictator, through purging of the Iranian military institutions of the old guard, imprisoning and killing tens of thousands of Iran's elite soldiers, Saddam Hussain's Iraq backed and armed to the teeth by the US with an army equal to that of Israel (if it stood alone) sought to capitalise on Iranian chaos by embarking on a war that was supposed to have Iraq's flag flying over Tehran within a few days, much as Putin expected would happen in Ukraine. Iran was as about as unready for a major war as any nation could be, however, Iranians fought Iraq to a stand still for 8 years without losing a single inch of Iranian territory.
Just as is the case with the Fourth Reich, Iraq was backed by the whole West, and Iraq used chemical weapons against Iranian soldiers and civilians alike, still there are some alive today with severe side effects from Iraqi chemical warfare. But Iranians defended their land, they put their lives on the line for their country, they even would walk into mine fields to make a path for their comrades to pass through so what do you think is going to happen during US / Zionist war against Iran? Iran will bleed the US Empire of it's wealth and power for what?
Zionists hark back to a fantasy history a 400 year window of a few settlements that were not deemed to be of any significance to any Roman or Greek of 2000 years ago to document. Whilst Iran was the worlds First Empire and has been there for over 5000 years, The fact that Iran and it's people and culture still exists despite repeated invasions such as by the Arabs Mongols,British and Russians should act as a warning that Iran is a far more potent a grave yard of Empires than Afghanistan! So no matter the carnage that Israel and a cuck'd US inflict on Iran be sure that in the end it won't be Iran that will be defeated especially given shifting dynamics and unintended consequences such as what is following the Israeli attack on a Russian airbase in Lebanon, Russia has now pledged to defend Iran against US zionist attack prompting much outrage in the West, despite the fact that the US has been defending the Fourth Reich for some 70 years. Though Russia apart from it's nuclear arsenal is not in any position to defend any ally, in fact it's the other way around, It's Iran that's been coming to the defence of Russia. What Russia needs is peace in Iran so that Iran can continue to send Russia drones and missiles in it's war against NATO in Ukraine. So Russia coming to the defence of Iran illustrates just how bad of a position Russia finds itself in.
Bottom line is that the world continues to trend towards a World War that likely will turn nuclear. All whilst only paying lip service to the key destructive megatrend of our age Global Warming! If only all of that humanity's effort expended in trying to kill one another was directed towards tackling global warming then we might stand a chance as lack of action means the eventual price tag for dealing with climate change will keep rising, probably to exceed total global defence defence spending by 2030.
Bitcoin Counting Down To Pump to New All Time Highs!
September was supposed to be Recktember i.e. a down month as tends to be the most probable seasonal outcome. Not now with Bitcoin closing well above $59k. Whilst Octobers are usually strong, look at what follows an UP September, 3 up months in a row! October, November AND December, Bitcoin looks set to soon trade well beyond it's $74k all time high.
So even though barely a few weeks ago some Patrons had fallen into total despair at $54k, my message was simple and clear, "You only need to know Bitcoin will trade to $100k+ before the end of this year". BTC $100k is +51% on top of $66k, the seasonal pattern suggests it is doable on a month closing basis let alone on swing highs. So whilst there is $34k to go, $100k+ before year end is definitely doable! I won't be waiting for $100k, I'll be trimming as I go along because the only thing that matters at the end of the day is crystallised PROFITS! as per crypto exist strategy my aim is to have sold half my crypto by BTC $100k, as crypto's are definitely one market folk should not get greedy with as it is basically play money, still it it is a whole lot of fun turning play money into real money!
MSTR No Brainier
MSTR pumps to near new all time high, reaching $194 as I write, up 25% since the start of October vs Bitcoin up just 1%, Up near 100% since the August low, proving to be a great leveraged play to bitcorn, has outdone all expectations, i.e. leveraged to the upside without the risks of leveraged ETFs that would have wiped one out during the dips (heed my warnings about leveraged ETFs!). BTC, MSTR and SOL is all folk need to ride the crypto bull, whilst the likes of CONBASE have been far more erratic in whether they will pump like MSTR or not, as I often remind folk from time to time, crypto IS gambling where the only reason I currently have 10% of my portfolio in crypto stocks, assets and turd coins is because of the upside potential i.e. risk vs reward, it's worth risking 1X for a potential 10X to 20X especially given that the likes of MSTR have already delivered many multiple bites at the cherry since I repeatedly pointed out to Patrons at the start of the year that whilst I can't tell you what to do with your money, but accumulating MSTR BIG sub $500 ($50) is about as no brainier as it gets!
Stock Market Election Year Five Nights at Freddy's
Therefore the current price of $485 is below fair value and thus cheap to accumulate relative to the bitcoin price as all those who had FOMOd into MSTR on the way up to $720 are getting wiped out. MSTR has achieved my target of trading below $500 where I had a big buy at $495, and yes it could continue trading lower to below $450 but it is now CHEAP in relative terms, and there will come a time when it will become expensive once more where even at div70 would now be trading at $615. Whilst at my minimum target for BTC that would put MSTR at $1420! And I suspect it will go a lot higher than that given that Michael Saylor is expert at pumping his own stock, $1800 would not surprise me! So in the big scheme of things whether one buys at $585 or $485 does not make that much difference given the potential of $1400+ Just that the ride is going to be very bumpy, not for those with weak stomachs or prone to getting caught up in FOMO.
Those who followed the no brainier trade within a couple months were able to trim into a 4x,rally to $200 since which it's been a case of riding the gravy train trading range of $200 to $100, that once more has MSTR trading all the way towards the top of the range to trim into pending a breakout higher to first target $250 and then $300 by BTC $100k.
CRYPTO EXIT STRATEGY REVISITED
Things are going to get nuts towards the latter stages of the crypto bull market, instead of folk taking money off they table they will instead be chasing returns by leveraging themselves up. As I have stated before l will get comments Nadeem why did you sell most of your crypto well before the tops, I sold because I know what's going to bloody happen! Unless your brain can take money off the table, all you will do is recycle the profits back into even more leveraged positions which means when it tops you WILL GET WIPED OUT! It is GOING to happen, huge paper profits will be wiped out for most and then they will go onto youtube about how they made and lost it all.... I included an exit strategy under the spreadsheet crypto tab so that folk don't lose all of their gains.
Which is why I included an exist strategy as a guide in the spread sheet and earlier because I know what's going to happen to most they will recycling profits back into crypto's, leveraging themselves as they swallow the cool aide that there are much greater profits to come, and thus the huge profits they will have made by the peak will all swiftly evaporate on the way down as their positions will be sensitive to small price drops i.e. even if they managed to buy a fair bit of bitcoin at say $25k, by the time the market tops at say $150k they will have recycled their huge profits by that time to be effectively leveraged to the bitcoin price going ever higher, so instead of say breaking even at $25k their break even will now be something like $100k, so WHEN bitcoin falls below $100k as it WILL they will LOSE ALL of their bull market gains and then eventually be sat nursing huge losses.
SO again I WARN to
1. Forget about trying to exit at the top - IT IS NOT GOING TO HAPPEN!
2. Have an exit strategy and implement it, you need to TAKE MONEY OFF THE TABLE AND NOT REINVEST IT BACK INTO CRYPTO THAT IS NOT TAKING MONEY OFF THE TABLE THAT IS SETTING YOURSELF UP TO LOSE ALL OF YOUR PROFITS AND THEN SOME!
Similar applied to stocks during 2021 I sold down from about 90% to 40% invested. To be able to do this one needs to get comfortable with trimming as stocks become expensive to reduce exposure, you won't sell at the top the best one can do is to have exited enough by the time the bear is well underway so one has ample cash to capitalise on the bear market which brings me to my next section -
STOCKS BEAR MARKET STRATEGIES
Folk in the US are lucky! Why because you buy and sell in your domestic currency, the USD! And thus the fx rate only really effects you when you go on holiday abroad!
Whereas everyone else has to contend with the fx rate.
Lessons learned from 2022 bear market.
Whilst I did hold a lot of dollars going into the bear market that I would convert as I bought stocks on the way down, however this dollar stock pile ran out by about April 2022 which was before the worst of the sterling bear market that would culminate in a panic sell off at to parity against the Dollar! Which made those falling knives buying during September and October even more painful then what they were to US investors as now we had to contend with a 20% drop in the sterling exchange rate as well! I.e. Pounds bought 20% LESS US stocks than barely a few months earlier!
Hence lessons for NEXT time! A better strategy than just holding cash dollars.
The easiest thing to do would be to hold dollars in an investment account that way the funds are deployed as limit orders but HMRC goes out of it's way to make investing as difficult as possible! Only GBP can be held in ISA's and even though SIPPs are open to FX NOST SIPP providers don't allow it!
So step one, open or move your SIPP to a broker that DOES allow one to hold USD! IBKR does, which is what I am utilising as my primary SIPP broker. Though they are a pain in a butt to get a SIPP moved to, typically takes 4+ months!
Secondly dealing with ISA cash mountains.
Say leave 20% for limit orders, and the rest can be put into dollar funds.
This is where my bond portfolio comes in as a test of what to do during a stocks bear market.
CAPTALISNG ON THE NEXT BEAR MARKET
What usually tends to happen during a bear market?
1. Stock prices fall.
2. US Dollar strengthens.
So if one invests in an INVERSE NONE leveraged S&P 500 ETF then one should be able to capitalise both on falling stock prices AND strengthening US Dollar. Which has led me to Xtrackers S&P 500 Inverse Swap (acc) XSPS listed on the London Stock exchange and priced in GBP.
This is what the chart looks like.
The inverted chart should look familiar.
However, when analysing the XSPS percentage swings vs the S&P 500 swings resolves in the following table:
Let me break it down in simple terms, the net result of going long at each swing high or low since Jan 2022 would have resulted in a 25% profit on the XSPS and a 29% profit on the S&P. Where Buying at the Jan 2022 high and selling at the Sept 2022 low would have resulted in a profit of 64% on the XSPS vs a 24% loss on the S&P.
Whilst Buying at the Sept 2022 low up until the recent all time high would have resulted in a loss of 24% on the XSPS and a profit of 57% on the S&P!
What this means is that in GBP terms at least the XSPS is leveraged towards the upside, i.e. exaggerates upside moves when the S&P falls whilst mitigating downside risk when the S&P rises. Unless I am completely missing something obvious then this is akin to the goose that lays the golden eggs as it exaggerates profits during S&P bear trends whilst mitigating losses during S&P bull trends.
In even simpler terms if one had bought XSPS on 3rd of Jan 2022 and not exited at the bear market low, but held on all the way through a series of new S&P all time highs then one would still be sat with a 20% profit! Whilst if one had say shorted the S&P then one would now be down 33%!
So what's going on?
As sterling goes up so the value of the S&P goes down and thus mitigates the downside risk whilst as the S&P goes up and sterling goes down then that exaggerates the gain, plus all distributions such as dividends and interest earned is reinvested into the fund.
What's the risk?
This is a derivatives product and thus is subject to counter party risks. Translation whilst it looks good, there is the risk that it fails to deliver going forward what it has delivered in the past and thus one should not get carried away i.e. I doubt I would commit more than 2% to 3% to XSPS if we were in a bear market.
Real Time Test
I bought some XSPS on 30th Sept at £504.7, with the S&P trading around S&P 5750. Last S&P 5695 -1%, XSPS at 521,7, +3.3%. Folk can track this themselves just make a note of the the current price of both and see how they change and you should see a significant positive advantage to XSPS as it behaves as though it is leveraged to moves in it's favour whilst resistant to moves against it. I will continue to trade XSPS on a small scale so as to observe how it performs in real time as the market moves in my favour and against me, especially during highly volatile times that is usually when being leveraged kills a position.
SKY Net has been Born!
AI assisted warfare is here and it's called Project Maven that is able to identify and track thousands of targets in real time with it's eyes in the sky including a constellation of satellites.
Maven has been used on the battlefield in Ukraine and across the Middle East including in Yemen to identify and track hundreds of targets, just one step removed from firing missiles on locked targets which for the time being given the smaller scale operations have human command and control. However during a major war such as what would take place with China command and control would be out of human hands and completely in the hands of AI i.e. Sky Net given thousands of fast moving targets that would need to be neutralised in real time.
Of course China is developing it's own AI assisted targeting system and the fact that Maven exists increases the risks of China seeing the only winnable solution being a first strike against US military infrastructure to degrade the ability of the AI to take out Chinese targets.
This is also quite funny in that humanity is busy creating the means by which AI will eventually use to both kill and control humanity, i.e. US AI will turn on the US, Chinese AI will turn on China and yes Israeli AI will turn on the Israel so that we once more become uneducated serfs labouring in the fields for our AI masters as an ignorant human population is much easter to control who will believe that this is how it has always been where today's great power the United States will become myth and legend just as Atlantis is today as folk will contemplate did the United States once actually exist?
POTENTIAL IMMORTAILITY IS JUST AROUND THE CORNER!
The secret to halting AND reversing ageing is BIOLOGICAL REPAIR MECHANISMs, bio machines that repair DNA damage that in humans results in cell death. There are creatures alive today that can repair DNA damage through use of bio machines such as Tardigrades and even more extreme bacteria. We really could achieve the cure to ageing process within the next 15 years through in part replicating what is already is taking place in such creatures!
As it is today with our bodies it's a race between damage and repair, what bio machines and maybe eventually nanobots will do is to gradually increase the rate of repair so we would be trending towards biological immortality i.e. live longer and younger lives which is what many of us already achieve today through mechanism such as increasing and maintaining lean muscle mass and avoiding stress, where the lack of one and more of the other increases the rate at which one ages. By 60 there are those who are old because they never weight trained and did some cardio and then there are those who are more similar to middle age who did. Similarly folk can age themselves faster via drinking, drug abuse, and having a stressful life, which unfortunately is our modern world is well positioned towards, i.e. we humans have not evolved to live lives that involve making hundreds of decisions a day, and then throw in the huge distractions such as swiping social media on ones smartphone's then it's no wonder everyone is stressed out all of the time, we are just not built for the world we inhabit hence the pandemic of mental illness and so many folk, especially men withdrawing from society such as the Hikikomori phenomena in Japan.
So biological age is not the same as chronological age. Once upon a time being in ones 50's was considered as being old, now it's more like middle age as very soon will become 60 and soon after that 70, can you imagine being in ones 70's as being in ones middle age? If you think you are old then you become old. So it's a case of increasing healthy life span through increasing the bodies ability to repair ongoing damage.
Here's a simple test that will instantly tell you where you stand
Can you do at least one pull up?
99% of the population fail this test! Won't be able to do a single pull up. So to take ones first step towards combating ageing work towards doing your first pull up! There are plenty of youtube videos showing how to get started and once you can do 1 your off to the races, where by the time one can do 15 or more you will have attained elite athlete status. Of course it's not going to be easy and it will depend on how much one weighs, so if obese you will need to drop the body weight. What about me? At current weight of about 218lbs I can do a couple, at 200lbs I should be able to do 5 or 6, and I am closer to age 60 than 50!
Make a start today!
Stock Market - Don't Ask Chat GPT!
Don't imagine for a moment that the likes of Chat GPT can offer you a short-cut to doing time consuming stock market analysis.
I asked chat GPT "Where did the S&P close at the end of August 2024"
I got the reply back
Actual was 5648. I varied my prompt and asked several more times and never got the right answer, closest was 5745. And there are folk basing their investment decisions off of this hallucinating garbage? If an LLM does not know the answer then it hallucinates the answer and presents it as fact, it's like a child that cannot admit that it does not know so instead spouts fantasy.
Your buy the dips and trim the rips analyst,
Nadeem Walayat
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By Nadeem Walayat
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Nadeem Walayat has over 35 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.
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