History Lesson on Blindly Buying and Holding the Dips in Volatile Markets

"Stocks have fallen sharply as a trade war between the world’s two biggest economies ramped up in the past week, and according J.P. Morgan, it’s a good time to start buying.

Equity markets could still be in for a few more weeks of pain, but J.P. Morgan head of global and European equity, Mislav Matejka, expects an eventual rebound. In the meantime, he recommended that clients “look to buy the dip.”

“Our core view remains that one should use the prospective weakness as an opportunity to add,” Matejka said in a note to clients Monday. “We continue to believe that global equities will advance further before the next U.S. recession strikes.”

CNBC, Stocks still have room to fall, but look to buy the dip, JP Morgan says, 5 August 2019

I will never forget the sage wisdom and comfort that was given by one of the regulars on bubblevision in the bloody aftermath of the first tech 'dot com' bubble crash in 2001, after cheerleading it all the way up and beyond.

"Nobody made you buy stocks."

'Investing' by buying dips in volatile markets is a dangerous business, suitable only for professionals who know how to hedge and manage risk.

Especially the 'unexpected' risks.

"There is no cause to worry. The high tide of prosperity will continue."

Andrew W. Mellon, Secretary of the Treasury, September 1929


"This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years."

R. W. McNeal, New York Herald Tribune, October 30, 1929

Gold and Silver Commitments, Holdings, and Technicals - What Is Hidden Will Be Revealed

"Gold will be around, gold will be money when the dollar and the euro and the yuan and the ringgit are mere memories."

Richard Russell


"'We didn't truly know the dangers of the market, because it was a dark market,' says Brooksley Born, the head of an obscure federal regulatory agency -- the Commodity Futures Trading Commission [CFTC] -- who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. 'They were totally opposed to it,' Born says. 'That puzzled me.  What was it that was in this market that had to be hidden?'"

PBS Frontine, The Warning


"Those entrapped by the herd instinct are drowned in the deluges of history.  But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."

Antony C. Sutton


"Gold in US dollars is 25.7 % away from its all time high.

Gold in renminbi is 13.8 % away from its all time high.

Gold in euros is 3.2 % away from its all time high.

In many other (major) currencies gold is at an all time high."

Jan Nieuwenhuijs, the artist formerly known as Koos Jansen

Stocks and Precious Metals Charts - History Lesson

Wall Street's finest discuss forming a 'stock exchange' under a nearby buttonwood tree

Stocks today came in lower, as the euphoria of risk-offishness from yesterday wore off rather quickly, after the bell as a matter of fact, as some new era darlings laid an earnings egg.

And this morning the appetite for chasing bubbling assets with hot money was cooled even moreso by an intemperate statement (what a surprise) from Trump regarding his indifference to his fellows meeting with the Chinese in September to discuss a resolution to the ongoing trade war.

But fortunately once the Europeans went home to say hello to the wife and kids and have dinner, the denizens of Wall Street managed to walk the stock indices back up towards nearly unchanged, as they are often wont to do when they have the opportunity.

And the usual suspects among the advisors in the White House were reassuring that, again no surprise, Trump did not really mean to say when he in fact said, in writing.

And so we had a bit of a risk-aversion hiatus, and the usual safe havens like gold, the Dollar, and the bonds faded a bit, and stocks were bought.

But there is a definite lack of whole hearted confidence in any of this trading, and cynically mechanical, so that time of positions being held must be down to milliseconds rather than a more judicious few hours or so.

So what does this mean?

It implies that, at least for now, the markets in the US will remain exceptionally fluid, which is a nice way of saying skittish and prone to event driven volatility.

If this up-and-down roller coaster continues on for the remainder of the summer, I would not be surprised if it does not shake itself apart before the winter.

Those of you who recognized the subtitle above, History Lesson, was a nod to the famous science fiction story by Arthur C. Clarke ought to be congratulated.  And those select few who recall the moral of the story itself can very well accept it as an analogy for understanding the stock markets and economic models of today.

And those who do not are invited to watch a brief illustrative video included below.

Need little, want less, love more. For those who abide in love abide in God, and God in them.

Have a pleasant weekend.

History Lesson from DD on Vimeo.