We're still in bizzaro world

I'ts been quite clear to me that the retail trading community has been short the market since at least the start of the year once again proving we're still in bizzaro world. Since the summer of 2009 I've used the term "bizzaro world" to describe the psycology of what I see in the market. Well, let me tell you we're still very much in bizzaro world when it comes to the stock market whereby it seems the typical retail trader is LOSING money whenever the market has a strong rally instead of making money which is what's normally supposed to happen.  So, instead of seeing people celebrate and cheer a rising stock market, I see whining and anger. Instead of embracing the rally, people have been fighting it wasting time and money obsessing about when the market will top and the higher the market goes the stronger the hand wringing gets. One thing I learned early in this game is that if you're ever a bagholder it's a bad sign if you're angry and stubborn  for it's likely the market isn't done spanking you yet. I keep thinking that at some point it's going to hit these people in the head like a brick when they realize that being the permabears that they are has been utterly foolish while the market has been up 100% in 3 years. This is denial at it's finest and something I saw after the tech crash in 2000 with the bagholders of tech stocks. Some of these permabears claim that they will "play both sides" but I've seen very few of them play the long side successfully because the moment the market shows any hint of weakness they are eaisly shaken out and embrace their inner permabear.

As I said back then in 2009, I believe this ingrained bearish, contemptuous attitude so many people have towards the market is LT bullish. It prevents me from fully embracing the bear case even when at times it seems quite convincing. For for the bears to be right about the LT doom towards the economy and the market it would mean that your typical retail trader, which history shows over and over lose money in the market over long periods of time, is going to be right and that's a bet I don't want to make.

So, why is it that we have bizzaro world in the stock market? I believe the underlying cause is bitterness. Bitterness for having been burned as bulls just prior to the big crashes in either 2000 or 2008. I'm quite sure that most of the bears I see today that dominate the blogs and message boards were once optimists who then turned to the "dark side" because they got burned either in the crash of 2000 or 2008. Being burned is the underlying reason for their conversion to bears and the bearish arguments they preach are simply rationalizations to justify and entrench their bitterness.  I'm quite sure they will vehemently deny this. I'm sure they would retort by saying they turned bear because the facts of reality made them. I don't buy that for a second except for the fact of reality that they were once burned as bulls and are bitter at the "system" which pulled the wool over their eyes. They are angry at CNBC and the "pumpers" they listened to, angry at the fed for "manipulating the economy" into creating a  "false prosperity"which suckered them into believing all was well.  For many, this anger and skepticism has become so ingrained that I believe they are scarred for life and will NEVER be LT bullish on the stock market ever again unless we see a total and complete collapse which they pray for every day. So many retail traders are dedicated bears now....it's the complete opposite of 1999.....it's bizzaro world!

Bizzaro world does not mean we will never see the market go down in a material way...it can and it has with the downdrafts in  mid 2010 and 2011. For me to place any downside bets or go heavy in cash  I need to be really convinced that one of these types of declines is forecoming i.e. all the ducks have lined up. If I don't see that I give the benefit of the doubt to the bulls...and I'm not talking about 2-5% corrections which I admit we are due for and perhaps may have started this week....those are not worth paying attention to on the grand scheme of things if you have good reason to believe the upside is still significant because if you get it wrong you will be on the sidelines or worse, lose money as the market keeps chugging a lot higher which a lot of people out there have learned the hard way. And when we do see material downside, bizzaro world suggests  that no matter how hopeless the situation appears, you have to have faith that somehow, someway the bulls will ultimately prevail to once again make suckers out of the group that is notorious for being suckers- the retail investor who has been largely absent on the long side since 2009 despite a monster move up in the market.



Lester update. Here's what he posted earlier this week.....no wonder the market has been on a tear lol!


Good evening all.  I have to make a confession.  I have been making bogus bullish posts because I kept thinking that I could use some reverse psychology and get the market to reverse and go down.  In reality I have been shorting this monster of a SPY market since January.  I have watched my portfolio piss away due to a 40 pt rise in the SPY and the fricking VIX has been dropping.  I have been pretending to be making some money and winning but the truth is I am down to $150 in my account.  I own a SPY Jun 119 Put (or is it a 124 I cannot even remember).  Of course I got killed by DNDN which has cost me $160 smackeroos.  Now a think I will post a joke because my account is a joke.  I should have just played AAPL Calls and I would be happy.