I'm writing you as a friend of the firm, and a worried one at that. I think it would be best not to publish this letter, but I will leave that completely up to you.
As you know, I have been a subscriber for some years, attended 3 full chart seminars plus 1 1-day seminar, and read Crowd Money 4 times along with providing some help on it. I've been doing TA since the mid-90's. I pay a LOT of attention to what you and Eoin write and say. Until now, I have always been pretty much in sync with your thinking, or was influenced by your thinking to get in sync.
Over the long term, I agree we will see a secular bull market propelled by technology of all kinds.
But now, my read of the markets, using the methodology you and Eoin have so beautifully crafted, tells me that we have entered into a globally synchronized bear market. I look at over 100 charts every day. Very few cry out to be bought, very few show basing patterns, but most show tops that are already confirmed. And many are deep into declines that still show no sign of basing.
Your advice to buy during this time feels really really scary to me. I'm not scared for my portfolio - I'm net short by a lot. But I am scared for your firm and your reputation. If this is the beginning of a fairly serious cyclical bear market, it would seem to me that you face the risk of a major loss of subscribers if you encourage them to buy now. I am not speaking for myself, in this regard, as I plan to stay a subscriber forever. But others may not be so clear thinking. If buying now turns out to be a bad call, you will be perceived as having missed a critical top in the markets, and having not rigorously used the now famous Behavioral Technical Analysis to evaluate the price patterns.
I'm worried for you.
A serious friend of FullerTreacyMoney...
Thank you for this detailed and thoughtful email. I genuinely appreciate your interest in this service and am touched by your concern.
The short answer on market analysis is that we all have more to learn.
In response to your main paragraph just above, I have always tried not to give advice. Instead, I offer my views and tell people what I am doing with my own investments. This is an important distinction. Few of our experienced subscribers wish to be told what to do. They want to hear clear, unhedged and objective views, which help them to clarify their own thoughts. Similarly, I spend a considerable amount of time reading and listening to different perspectives to help me clarify my own thoughts. Most of our less experienced clients also wish to develop that same independence of thought, which can help them to think clearly during the crowd manias.
For this reason I have always wanted to be in charge of my own thinking process. I know it will not always be right – nothing ever could be in attempting to anticipate the future. However, if you can observe markets objectively, trying to understand the psychology of fear and greed, in addition to the main fundamental economic factors, you have a good chance of being right more often than wrong, especially on the big calls.
Fortunately, ever since late 1969 when I left a big firm, I have had the freedom to develop independent analytical thought which is exceptionally important to me. In other words, people may agree or disagree but no one sensors my research output. Additionally, I am not worrying about my reputation before providing a market view; otherwise I would wind up hedging everything and subscribers would hear fewer clear thoughts and opinions.
I am very surprised by your comment that I could “be perceived as having missed a critical top in the markets” during recent months. Perhaps you did not hear the August Audios which focussed on the deterioration before I left on a three-week reunion holiday on 20/8. Significant corrections, some cyclical bears, particularly for commodity exporters; a high probability of Wall Street’s first 10 percent plus correction in four years before the end of October, were all mentioned in those Audios.
I have recently said that panicky, “blood in the streets” sell-offs such as we saw on 24/25 August and the recent retest of those lows were a better time to buy than sell. I also favour an incremental, Baby Steps buying on weakness strategy, as I used today, not least as October is often difficult for stock markets. Yes, chart patterns show lots of tops and some sharp setbacks. Moreover, there is no confirmation that we have seen more than temporary lows. However, if you wait for confirmation of a floor after a sharp correction or even a cyclical bear trend, that may only be confirmed after a significant recovery has occurred.
The Behavioural side of Technical Analysis that this service has helped to develop includes an assessment of the extreme bearish sentiment that I have seen since returning from holiday. We can see that in many of the moves to the downside, and hear it in many market commentaries. There is certainly better value in the markets today and we may see more of it in October. This is why I am looking to buy on weakness.
In using this interactive service we are also sharing and contributing views, which may increase perspective. I encourage experienced subscribers to maintain an open mind and follow their own instincts.
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