Every one of these topics could be a separate blog post, but I’m just going to fire off a few things going through my head right now (in no particular order):

1) I keep hearing about how we should prepare for a “higher rate environment.” Why are very few people taking about the possibility of rates staying low for the next 3-5 years?

2) No one wants to commit to this market with any conviction. The sentiment readings show the majority of people are in the “neutral” camp. I get it. It’s tough to be bearish because calling for a correction has been futile over the past 3 years, and it’s tough to be bullish because “we’ve come so far without a correction.”

3) I talk to so many potential investors who are scared. They don’t want to commit capital until we see a correction. I keep telling them they might be waiting a long time because there is still a globally coordinated effort to keep rates low and the markets high. Of course we will see volatility, but as long as this liquidity driven environment exists, it’s tough to see a PROLONGED correction.

4) Many traders are also scared. It seems like any time a few warning signs appear, we see a spike in bearish sentiment, a rush for put option protection, and a reduction in exposure by active managers. This constant nervousness and “one foot out the door” mentality helps to keep this market afloat and continues to fool the majority.

5) You make your most money at the beginning and end of bull markets because that’s when the most doubt exists. What if this is the beginning and not the end? Why is the 2009 low considered the beginning and not the new high made in early 2013? What if this is only year two of a possible 10-15 Bull Market super-cycle? Again, I’m not saying it is, I’m simply mentioning the possibility.

The main lesson from this post is to learn to think for yourself. Don’t trade on what you think the market SHOULD be doing, trade on what it is ACTUALLY doing! Many of us are brainwashed by financial TV, investment blogs, etc. because they force us to think one way. I’m guilty of it too at times but, remember, the market tends to fool the majority, so don’t think like everyone else. Good luck trading and trade with confidence!

I can be reached at: jfahmy@zorcapital.com.

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