How to get into things that have already moved? (16 Feb 2021)

[NIC] Hi guys, welcome to another episode of Life of a Trader. Today we’re going to talk about how do we get onto things that have already moved too much. I think that’s an issue for a lot of people. How do you do that, Vee?

[VEE] hi Nic. So I guess the conversation is that our Central View is that the risk assets will continue to Rally. Meaning prices continue to go up in dollar terms or in fiat currency terms. The view is based on the fact that major central banks, especially the US Federal Reserve, continues to print unlimited amounts of money and fund the US stimulus plans, which Biden wants to introduce a 1.9 trillion dollars, which he says, is just a down payment for the future, right? And Janet Yellen has repeatedly stressed that it’s the time now to go big and I think that’s very significant that it is not even addressing the domestic audience now, but she’s telling the G7 finance ministers this is not the time to stop fiscal stimulus. It’s time to go big, right? So, just keep on going until inflation appears. I think our view is also based on the fact that inflation has been consistently and persistently below their targets, and they have learned from the lessons of the past when they try to taper – meaning, they try to remove the easing measures, reduce their balance sheet and try to hike rates. What happened was markets started to react badly, asset markets came off. Inflation was trending a little bit higher and it started to come off a lot, right?

So now, they’re not going to be proactive, they are going to be reactionary. They repeatedly told us this. And the question now for many people our community is that this view is all well and good but it’s not really useful to me now because markets have moved up a lot, stocks are at all-time highs Bitcoin as of today is at all time highs too. Many of the things that we are involved in, that we truly strongly believe in are at all time highs. So question is that, how do I get on right? The train has already started moving and using the analogy of the train. Yeah, you’re getting left behind. If you have a chance to get on, it kind of depends how far the destination is right? If it’s just the next stop, we are going to get off, then, really there’s no point, right? But the risk of not getting on is that if this is just the beginning of the move (which I believe truly that it is the beginning of the next leg of their currency, devaluation and weakening of the dollar). So mentally, there’s a barrier for some guy who has not been involved, you have missed maybe 20%-30% of the move. It’s very difficult. Things are very expensive but it’s only expensive relative to the Past, right? It’s not expensive relative to next week. It’s not expensive relative to next month. So, I have friends who are very sharp investors who refused to get on because they say oh you know, I’m waiting for the next the 15, the 10 to 15 percent retracement. Sure. Of course, if you think there’s going to be a time 10-15% retracement, it could be useful. But what if there isn’t? Then there’s the next hundred percent, rally right? So what I would do if I were in their shoes, I would invest a little bit. I will get involved with a small position right now. I wanted to do a hundred dollars of it. I’m going to do $20-$25 now and hope for the 10-15 percent correction to get more in. But if it doesn’t get more in, you feel better than if it starts to trade higher (and you don’t have any positions) as you have some involvement right? You can improve your average – say I buy now, three percent higher than before, it’s okay, right? Because I bought some lower right? Of course, my average is still lower than market and psychologically that makes the difference, right? You start to be like, okay, I’m not getting in late in the game again, now you’re like okay I got in some before and now I am just adding to it.

Psychologically, it helps me and the people that I know who’s tried this before. And it’s also useful for people who are sticking to the arguments that is over value or people that are not participating in this rally and are trying to sell it. They’re getting stopped out or they are making small profits as it corrects one, two percent, right? But it’s fighting against the tide, right? It’s swimming against the tide and then you’re getting further and further from where you actually want to be, right? So, my advice is don’t fight it. Get involved a little bit first. First of all, just don’t fight it, right? Don’t fight the trend. There are many other things to do than to fight Trends, right? Stay out of the way if you cannot find yourself to get involved. If you cannot find yourself to get involved at these lofty levels, then just get involved some, look for retracements, right? And look for opportunities to get involved more. So that’s the way to get around this mental block. Because I think now, this is just a mental block, all the arguments that is there for it to not be a trend has always been there, right? And the price action, and everything else has proven that there are bigger things at play, right? And right now, it’s critical. This cycle is very important, it’s the beginning of a very big cycle and I call it a cash crash. I think when you call it asset bubble, then you find it very difficult to get involved, but it’s a cash crash – the governments are continuously going to print, they are going to devalue, they are going to give you whatever cash you need. Giving it to the consumers, they’re giving it to the unemployed. They’re printing it to lend people to take risks, to start their businesses, to subsidize their cost. And if you think about it, if you have asset that has a unlimited supply, the value is just going to go down, right? And it will go down until such a time where the unemployment situation changes, the economic performance changes and most importantly inflation appears. It has to be actual inflation and not inflation expectations anymore. Yep. So try to get around the mental block of not getting involved in big trends. I believe this is just 20% of the way of a very, very long journey. With that, as always, stay true to the process and eventually you’ll be profitable, thanks, Nick. Take Care.