Trend is your friend until it bends..!

25 Jan 2022

I have never seen a correction stronger than the main trend..!

In the past 4 trading weeks, all the gains of the second half of 2021 have been wiped out..!

I know a little about Macro and Fundamental as well:

Let's look at some old school metrics:

NASDAQ100 PE Ratio: 25.33

S&P 500 PE Ratio: 24.82 (Mean: 15.96),(Median:14.88),(Min:5.31),(Dec 1917) ),(Max: 123.73(May 2009))

I believe markets are far from being attractive at this moment and usually, it happens after the bull run is finished!

It might be a bold prediction, but the market PE ratio tends to reverse to its mean like many other trends!

This means either profit should increase or securities' prices decrease 40%..!

In this high inflation era, the cost of everything is going up, Labor, Borrowing money, commodity ...etc!

So the second scenario which is a 30-40% correction in the coming weeks (months) is more likely to happen!

Now you realize why Waren buffet Piled up 150 billion dollars by the end of 2021, and Micheal J Burry has sold 94% of its portfolio..!

Buffet indicator: SPX


Since Warren Buffet is not a generation Z favorite, I asked them to think about Elon Musk's reply to a tweet a few days ago that most startups will not survive the next recession..!

If you are thinking about opening a long position, please consider this bold contrarian view!


Best,
Moshkelgosha

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