/biz/ - Business & Finance

I feel sorry for the average retail investor.

So, this is what I think it's happening.


This is a gigantic bubble that is bursting. If you see the charts of the the last 20 years of the US industrial production and the DOW, you clearly see a total detachment from reality.
Coronavirus was only the trigger, the catalyst that had shaken a zombie economy which was strong in the appearance thanks to the ridiculuous FED printing to prop up the markets.
If it weren't for the FED, the stock market would have crashed by more than 50% in March-April of this year.
Anyway, I think that big drop will come in autumn for two reasons:


1) Trump. The FED will play the music till the november election because Trump wants to be elected at all costs and he can say to the average trumptard that the economy is strong, that he saved the US from coronavirus and so on. Reality: he's just another clown who is there to protect some special financial interests.
2) A possible 2nd wave of coronavirus. This will create again panic selling among the investors.
3) Q3 earnings BELOW expectations. You see how everyone is saying "come on guys, everything is fine, the economy will start again at the end of the year".
I don't think this will be the case.

So, I think that the chickens are coming to roost in Q4 of 2020 (October-December 2020).


Maybe I am wrong. This is only my opinion.
I suggest you to stay >90% cash. If you feel safe, you can find some good opportunity (very few indeed). See for example CVX, KO, T, VZ. They are not anymore at good prices like in March, but if they drop by at least 10% they are clearly a buy.


Don't be the average investor: please do all your research when you buy a company. Don't buy only because "it's cheap". Avoid companies like AAL which sounds next to bankrupt. A bailout is not guaranteed (don't trust Trump, don't trust ANY president).

Be careful and never put your eggs in one basket. (and buy LINK)