Just letting you know that I will be posting here more often now. It has been a while since I was active on my board here. I have been spending time honing my trading system.
I am now a wise option seller . . for consistent, less stress, profits.
I am currently short various bearish, way out of the money, May and April SPY Call option Credit Spreads whose values are dwindling away into my brokerage account . . the profitable premiums I collected staying there.
I will start posting more here about my Trading System Methods.
“Everybody’s Getting Rich (and Having Fun) Except Me” The idea of “missing out” on stock market gains “literally generates fear in many people”
By Elliott Wave International
Hardly anyone wants to miss the party — whether on Wall Street or elsewhere.
Thus, the acronym FOMO — which stands for the “fear of missing out” — is in vogue. After a 12-years long bull market, the acronym has appeared in many financial articles.
Yet, the acronym was coined years before the current bull market.
As the March 2019 Elliott Wave Financial Forecast, a monthly publication which provides analysis of major U.S. financial markets, noted:
The “fear of missing out” and its abbreviation were coined by Dr. Dan Herman. … It was first published in The Journal of Brand Management in 2000, coincident with the front edge of the Great Peaking Process. … After more than 200 years of rising stock prices, not being in the stock market literally generates fear in many people. The underlying cultural dynamic is also appropriate as it coincides perfectly with the long-term peak in social mood.
Social mood also governs attitudes and behaviors in society-at-large, including social life.
As a June 7 New York magazine article says:
The city runs on FOMO, a connoisseurship of opportunities and possibilities; the catechism of “Did you get invited, are you on the list, can you get a table?”; the performance of plans.
So, the “fear of missing” out on rising stock prices goes hand-in-hand with the “fear of missing out” on a fun social life. The desire to “see and be seen” and “live it up” is especially pronounced during times of an exceptionally positive social mood (think the Roaring ’20s).
So, social mood is all encompassing. And, returning to the financial aspects, here’s the latest on that front from Marketwatch (May 25):
[The] FOMO ETF [started] trading on the Cboe Options Exchange on [May 25], providing the market with a new tool for leveraging the retail trading boom by investing in all the buzziest “meme stocks” and funds from special-purpose acquisition corporations … to crypto-adjacent investments.
Right now, hardly anyone appears to be contemplating the total opposite of FOMO — which one of Elliott Wave International’s analysts said is the acronym FOBI. It stands for the “fear of being in.”
In other words, when social mood shifts from positive to negative (ushering in the next bear market), expect the “fear of being in” to replace the “fear of missing out.”
Remember, at the end of the 1920s, the stock market crashed. Social life — which had been characterized by vibrancy — was soon covered by a heavy blanket of gloom. The Wave Principle suggests that the next financial and social shift might be even more dramatic.
If you’d like to learn about the Wave Principle, you can do so by reading the online version of Frost & Prechter’s Wall Street classic, Elliott Wave Principle: Key to Market Behavior for free.
Here’s a quote from the book:
It is a thrilling experience to pinpoint a turn, and the Wave Principle is the only approach that can occasionally provide the opportunity to do so.
The ability to identify such junctures is remarkable enough, but the Wave Principle is the only method of analysis that also provides guidelines for forecasting. Many of these guidelines are specific and can occasionally yield stunningly precise results.
All that’s required for free access to the book is a Club EWI membership — which is also free.
Club EWI is the world’s largest Elliott wave educational community (about 350,000 members and growing rapidly) and offers members free access to a wealth of Elliott wave resources on investing and trading.
This article was syndicated by Elliott Wave International and was originally published under the headline “Everybody’s Getting Rich (and Having Fun) Except Me”. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
I am going to start teaching about Dividend investing and sharing my real portfolio. It is amazing! Below is my current portfolio . . all numbers are for year-to-date. Remember from my last post, I started with a real $50,000 account . . . buying up some good yielding stocks that I saw probable stock-price improvement coming as well. By investing in dividend-growing stocks whose price is also growing results in huge income over time. I’ll get into such a lesson some time in the near future. For now, here is my current portfolio:
VALUE = how much money my initial investment is worth now . . . including dividends and sales
IN $TOCK = how much money is in the stock right now
SHARES = how many shares I currently own
COST/sh = initial price @ initial investment
%GAIN = overall gain since initial purchase = VALUE over Initial Investment $$
Many stock market investors believe that prices have already bottomed. Numerous banks, brokers and financial firms have issued statements saying as much.
Indeed, the May Elliott Wave Theorist, a monthly publication which has offered analysis of financial and social trends since 1979, noted:
On April 28, Bloomberg interviewed four money managers to answer the question of “Where to Invest $1 Million Right Now.” Cash was not mentioned.
All these professional financial observers might be right in their assessment that the bottom is in for stocks.
Then again, the stock market rise since the March 23 low might be a bear-market rally.
If so, it certainly has “done its job,” meaning, as one of our global analysts put it in Elliott Wave International’s May Global Market Perspective (a monthly publication which covers 40+ worldwide markets):
The job of [the first, big bear-market] rally is to recreate the optimism that existed at the previous highs.
One particular sentiment that the rally has “recreated” is known by the acronym FOMO, which stands for the “fear of missing out.”
A little background: Toward the end of 2019, the FOMO sentiment was prevalent. Indeed, our December 2019 Elliott Wave Financial Forecast (a monthly, U.S.-focused publication which covers stocks, bonds, gold, silver, the U.S. dollar, the economy and more) showed this chart and said:
Last week, the percentage of bulls polled in Investors Intelligence Advisors’ Survey rose to 58.1, a new 13-month extreme. … Last month we talked about the return of FOMO, the fear of missing out on stock gains; its last major outbreak occurred as stocks approached their January 2018 highs. In November, FOMO became far more entrenched. One Bloomberg commentator called it “the age-old fear of missing out” and stated, “The end of the year is coming, when investment managers will be judged on their performance. Those who are behind have an incentive to clamber into the market now, while there is still time.” In our experience, “to clamber” is generally not a sound investment strategy.
As you know, it wasn’t long thereafter that the stock market topped. The major price moves downward were historic.
Even so, the “fear of missing out” sentiment has returned — again.
Here’s an April 7 Bloomberg headline:
FOMO Overwhelms Stock Traders Who Have Begun Ignoring the Risks
Our May Elliott Wave Financial Forecast provides more insight:
According to Google News, the number of articles referencing FOMO and “stock market” increased from 227 in December 2019 to 244 in February 2020, right through the peak in the market. In March, the market’s decline was well established, still the FOMO news count rose to 267.
So, yes, the rally has indeed “recreated” the prior optimism. One might even argue that the level of optimism is now even higher.
So, should investors take the stance that the bottom is in – or, proceed with extreme caution?
Knowledge of the stock market’s Elliott wave pattern will help you to answer that question.
As the Wall Street classic book, Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter, notes:
The primary value of the Wave Principle is that it provides a context for market analysis. This context provides both a basis for disciplined thinking and a perspective on the market’s general position and outlook.
You only need a Club EWI membership, which is also free. Club EWI is the world’s largest educational Elliott wave community and allows you to get Elliott wave insights on investing and trading, the economy and social trends that you will not find anywhere else.
This article was syndicated by Elliott Wave International and was originally published under the headline Why Bear-Market Rallies Are So Tricky. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
