ZH: Record Asset Classes Down On The Year
"This is the highest percentage on record based on data back to 1901, eclipsing the 84% hit in 1920."
This retracement rally is now led by short-covering in Chinese internet stocks, which means it will have the shelf-life of a rotten banana. Overall, this week is setting up similar to February VolPlosion 1.0, albeit with a few differences. Suffice to say, high expectations going into Apple earnings were not amply rewarded back then...
This time, the stakes are 10x higher:
Rewind to February 2nd, the day after earnings:
Feb. 2nd, 2018: Apple Falls -4% Despite Strong Earnings
"The company's stock fell more than 4% on Friday. Apple released strong earnings results on Thursday but failed to fully dispel lingering concerns about iPhone demand."
Here is the lone bright spot for Tech:
Bulls don't just have to worry about what could wrong, they now have to worry about what could go right.
But first, Donny is blatantly trying to game the casino ahead of the election next week using Twitter-based Jedi Mind Trick. Just as he did ahead of the North Korea summit in June, he has to take back everything he has said on trade until the "event" is over.
The North Korea Summit was June 11th, he imposed the $50 billion in tariffs on June 15th. The problem with Trump is that he thinks everyone is as dumb as he is. China is still pissed off about the last time this happened:
“Every flip-flop in international relations simply depletes a country’s credibility”
I've learned a lot in this past decade. But by far the biggest lesson I've learned is the unlimited extent to which human beings will lie to themselves. Almost as much as they lie to others. There is NOTHING they won't believe, unless it's the inconvenient truth. In which case all bets are off. Which is how we ended up with thousands of religions and belief systems - everyone wanted their own version of what wasn't going to happen...
When Hugh Hendry penned his "Power of Imagined Realities" letter to shareholders, I was taken aback by this Madoff-inspired approach to investing. I thought it was a joke. When he turned out to be "right" - by predicting an impending Ponzi rally in real-time, I was even more taken aback. Who can predict and then monetize these types of manias? It had turned into a line of business. The practice of predicting how stupid our fellow humans will be and then cashing in. Looking back however, that is exactly what 2008 and subprime represented - cashing in on mass delusion.
Fast forward ten years since The Big (Subprime) Short and there have been myriad bubbles across virtually every asset class. Untold opportunities to ride delusion up and short it on the way down. If that's your bag. This last delusion however was the biggest in human history - powered by $1 trillion of borrowed money. Now featuring an S&P 500 unchanged on the year and record global assets negative on the year. Despite - or indeed because of capital inflow to mass delusion.
One of the "features" of every Third World nation is the ubiquitous "get-rich-quick" scheme. If your job is unending toil in a Chipotle/Subway/[Insert here] food assembly line feeding a society of elephants hell bent on eating themselves to death, then the unoccupied mind quickly turns to how the fuck do I get out of this sweatshop? You see your friends making bank on Bitcoin, Fucktoken, Titcoin, PotCoin, CasinoCoin, SpankToken, GraftCoin, etc. etc. and the mind soon thinks "why not me?". All I need is someone dumber than me. Rule #1 of sales: always sell to friends and family first.
It's all fun and games until someone loses an everything.
And then you get to the end of it all and see that hopes are now pinned on the most overowned and overvalued stock in human history. A company that was once the greatest Tech company ever, then almost went out of business, and is now the greatest Tech company ever. Even better than the first Apple, the one that almost went out of business.
"Apple is the last domino standing. Its FAANG brethren have all crashed"
"Apple is the lone bright spot for Tech, within the smartphone space as well"
"I'm optimistic"
