Stanley Druckenmiller warns the stock market will be ‘flat’ for an entire decade

1) Send out a bunch of letters predicting moves on (usually) penny stocks; a different set of stocks is used for each letter

2) A few days later, cull the recipients whose predictions didn't work out. Send another batch of predictions, again individually varied, to the remainder

3) Repeat once or twice more and you've got a small list of people who've received three or four correct predictions in a row. Hammer them with solicitations to invest in your "foolproof" scheme

4) Collect (via a pump-and-dump, or just solicit the money directly and run)

Nowadays it's probably happening in Telegram groups or some such. Or you could do this on Reddit et al. using different usernames, and only keep the accounts that were right.

> Before we begin this examination, I would like you to imagine a national coin-flipping contest. Let’s assume we get 225 million Americans up tomorrow morning and we ask them all to wager a dollar. They go out in the morning at sunrise, and they all call the flip of a coin. If they call correctly, they win a dollar from those who called wrong. Each day the losers drop out, and on the subsequent day the stakes build as all previous winnings are put on the line. After ten flips on ten mornings, there will be approximately 220,000 people in the United States who have correctly called ten flips in a row. They each will have won a little over $1,000. Now this group will probably start getting a little puffed up about this, human nature being what it is. They may try to be modest, but at cocktail parties they will occasionally admit to attractive members of the opposite sex what their technique is, and what marvelous insights they bring to the field of flipping. Assuming that the winners are getting the appropriate rewards from the losers, in another ten days we will have 215 people who have successfully called their coin flips 20 times in a row and who, by this exercise, each have turned one dollar into a little over $1 million. $225 million would have been lost, $225 million would have been won. By then, this group will really lose their heads. They will probably write books on “How I turned a Dollar into a Million in Twenty Days Working Thirty Seconds a Morning.” Worse yet, they’ll probably start jetting around the country attending seminars on efficient coin-flipping and tackling skeptical professors with, “If it can’t be done, why are there 215 of us?” By then some business school professor will probably be rude enough to bring up the fact that if 225 million orangutans had engaged in a similar exercise, the results would be much the same — 215 egotistical orangutans with 20 straight winning flips. I would argue, however, that there are some important differences in the examples I am going to present. For one thing, if (a) you had taken 225 million orangutans distributed roughly as the U.S. population is; if (b) 215 winners were left after 20 days; and if (c) you found that 40 came from a particular zoo in Omaha, you would be pretty sure you were on to something. So you would probably go out and ask the zookeeper about what he’s feeding them, whether they had special exercises, what books they read, and who knows what else. That is, if you found any really extraordinary concentrations of success, you might want to see if you could identify concentrations of unusual characteristics that might be causal factors. Scientific inquiry naturally follows such a pattern. If you were trying to analyze possible causes of a rare type of cancer — with, say, 1,500 cases a year in the United States — and you found that 400 of them occurred in some little mining town in Montana, you would get very interested in the water there, or the occupation of those afflicted, or other variables. You know it’s not random chance that 400 come from a small area. You would not necessarily know the causal factors, but you would know where to search. I submit to you that there are ways of defining an origin other than geography. In addition to geographical origins, there can be what I call an intellectual origin. I think you will find that a disproportionate number of successful coin-flippers in the investment world came from a very small intellectual village that could be called Graham-and-Doddsville. A concentration of winners that simply cannot be explained by chance can be traced to this particular intellectual village.

https://www8.gsb.columbia.edu/articles/columbia-business/sup...

https://static.twentyoverten.com/5980d16bbfb1c93238ad9c24/rJ...

Most devotees I talk to get visibly frustrated when I suggest that you can look at larger macroeconomic forces, like COVID, supply chain issues, Fed manipulations(both positive and negative) and make educated predictions on the direction of stocks. My guess is that these are folks who just don't want the frustration of learning about these things, and I get that. It is a significant cognitive load to maintain an understanding and awareness of market influencing factors.

I use a family member as an example who was told by their money manager to move to cash at the beginning of the year. That wasn't just dumb luck. Was it a sure bet? Nothing is in this world. Do you bring a winter coat to a July outdoor event in Phoenix? I mean, it could be cold, right? But yet the writing was on the wall for the direction equities and bonds would take this year.

Can you perfectly time the bottom? No. It's also important not to be too conservative. The majority of gains in a stock market cycle are made in the first sprint out of the gate when everyone is still fearful. But you can know when things are peaking and GTFO before the slide. You don't need to be Michael Burry to spot these things either. You just need to not watch CNBC and Cramer or any of the other paid shills.

If you let that $100k balance stay in VTSAX on Jan 3rd, you would be -19.15% and have $80,850 sitting there today. Granted in this example there aren't regular deposits going in so it really is just money parked there. If you are continually contributing money into a 401k or other tax deferred account, contributing as the market goes down is fine because you're averaging down with the market. Or maybe its not fine depending on your personal circumstances (i.e. going to retire soon or something like that).

Companies always go to shit eventually and you're left holding the bag. Spesh because there's no dividends and companies never wind down, they just do gambits with borrowed money. That's the Way of the American CEO. Dude these dumbasses even publish books about that being the way, like Jack Welch's suckafucking book Straight from the Gut yeah spilled his guts alright.

That means that when they can't pay that debt, the creditors have priority, shares get no part of any of the money. So CEOs can't own debt on their own company (I think, there's rules, like they all get broken but there's still rules and breaking them has a cost like in slaps on the wrist, like it has to be very intermediated, because otherwise duh first thing everybody would do is short the company they run and fly it into a mountain). So it looks very smooth, very well thought-out, high-integrity, the American tax system is like that too, looks air tight on form 1040, and if you dig it looks more and more airtight until--whoosh cracked window on an airplane everything flying out. Nah.

Dude get in and get the fuck out. Know when to sell. Bill Browder, whom I don't think much of in most regards and have ripped on here explained why he's a nomad. But having talked him down, he does say smart dead-on-the-money intel. You gotta know first off when to get in. Under the thesis that it's exponential (it's impossible to respect that thesis, cubic at best, cubic is short and sweet, "ex-po-nen-tial" is a mouthful) so you can get in whenever it makes no difference. There's no sexy part of the exponential, every part of the exponential is sexy. Like I don't know I got advice like get out right when it's taking off--it never takes off. It's identical to its derivative, no inflection points, no maxima, no minima, it's the comparable in its uniformity to a flatline. In a sense it is a flatline because of inflation, that connects both curves, e^x - e^x = 0, f(x)=0 is the flatline. Alternately, e^x / e^x = 1, f(x)=1, though that's a totally different flatline.

So there is a moment to get in and that's when there's a genuine crash that nobody saw coming, that later is said to be impossible to predict--dude that's when. But to get in at that point you need to have gotten out before then, ideally at the peak. So because of relativity you can't react to the peak, see oh it just peaked time to sell--no there's a delay, like coupla hours for a customer to talk to his broker, so gotta preempt the peak by a coupla hours, that means gotta give the sell order pre-peak--meaning while it's still going up according to some smooth description of the Brownian curve (you never see it in the full grain, that information costs money an hn user doesn't pay). So it's critical your broker try to talk you out of it--that's a very good sign, just convince him you're stupid and he'll say "eh, masochist"--that's exactly what you want to hear. Because if you do depart the cyclical assets at the peak of the cycle and transfer it to countercyclical assets, then you get a bonus from them (not much, gold is politically oppressed by practically all empires, only one exception) so like gold won't double, but in my analysis that's because it's too feared so instead Bitcoin would jump, and I bet on it on margin almost at the trough, and I got 90% of the appreciation in Oct-Nov last year.

So that's the thing, selling near the top. So it's a totally political move, just like predicting the peak on Sep 27 (when the Fed announced the rate hikes, charts lie inflation lies that was the peak that was when the shit got really sticky and the pipes backed up) 30 days before. So for my personal protection, in order not to be subjected to additional psychiatric malpractice and experiments and all that shit, instead of saying my spine gave me a trillion-dollar twitch, I will play the fool card and say it was a quadrillion dollar twitch. What's the difference? For me both are infinite resources, even a million dollars is infinite resources. The difference--even if I say this explicitly--is when I say quadrillion shrinks say I'm crazy, which is good that's what I want. Chose which ward I end up in carefully. Dude no spinal taps.

Like they say, more wealth has been lost trying to time the market than in crashes.

https://totalrealreturns.com/s/VFINX

1: https://www.macroaxis.com/invest/pair-correlation/DIA/%5EGSP...

What else is a passive investor gonna do?

If you look at an inflation-adjusted total return chart (as opposed to just price), the actual drop in investment value was much smaller. I think "flat" isn't a terrible way to describe it.

https://www.multpl.com/s-p-500-dividend-yield

http://www.simplestockinvesting.com/SP500-historical-real-to...

Can the Fed destroy demand/cool growth via the benchmark rate faster than workers leave the labor force (strengthening the labor market for those who remain)? ¯\_(ツ)_/¯

[1] https://www.youtube.com/watch?v=EXp8Z7_Y4Bw

https://fred.stlouisfed.org/series/WSHOSHO

Why would they even try to undo 14 years of asset purchases? Their goal is only to reduce the growth in nominal spending in the economy so that it grows at around 4% annually (yielding an inflation rate of 2%). The goal is not to return nominal spending back to where it was in 2008, which would involve nearly a 50% cut from current levels.

Which means it's high over the last three years. It doesn't mean it's high today.

Because its a short-lived blip? Didn't we just have record lows less than 2-years ago?

consider the Nikkei...

no crystal ball

¯\_(ツ)_/¯

I own no crystal ball