Mavens Aligned

"I wanna tell you a little secret. Being The One is just like being in love. No one needs to tell you that you are in love. You just know it--through and through."
--The Oracle (The Matrix)

Studying financial markets over the past 20 years, I have been attracted to people exhibiting sound thought processes. I learn well this way. Study thought processes for their validity. Adopt/embrace those that ring true in concept and in application. Discard those that don't.

Financial market thought processes are regularly put to the test in markets of all types but, for me, they are particularly useful during multi-year bull markets. This is because it is easy for me to get caught up in the emotion of rising prices, and I have found that it is only the clearest thinkers who can separate investment from speculation during secular uptrends.

The best thinkers can consistently identify long term rallies that are destined to fail and fail big. If your investment horizon is relatively long (like mine), then you don't care if these forecasts pan out right away. The important thing about epic market failures is that they wipe out years of gains. Once you are confident that you are in a window for epic decline, you want to manage your risk profile in a manner that allows you to cope whenever markets ultimately come unglued.

People who in my experience have demonstrated well reasoned capacity for calling looming big declines are, from where I sit, true 'mavens' and worthy of my attention.

In the late 1990s, a small group of mavens that I was observing correctly identified the dot com bubble. Some were years early, but it didn't matter. When the bubble popped, years of gains were lost.

In the mid 2000s, that same group of mavens, plus a couple more that appeared on my radar, correctly identified the mortgage/credit bubble. Some were years early, but it didn't matter. When the bubble popped, years of gained were lost.

So here we are again. Once more, the mavens that I respect are in agreement. All in this group believe that we are headed for an epic market wipeout. Some have been saying this for years and have been labeled 'permabears,' cassandras,' etc. because the decline has yet to occur. Similar labeling, btw, happened in previous cycles as well.

In the two secular bull markets that have defined my past two decades of finanical market education, these mavens have correctly called major turns. They are aligned once more, with reasoning that again seems sound.

position in SPX