Market Update 12/13/2019

The S&P 500 keeps making new highs. Already it is at 3180, a gain of 130 points since I put out an update a month ago.

Looking at the chart and drawing some trend lines, I extrapolate a target of 3800 by the end of 2021, but I think 4,200 or more is easily doable

Also was right about Tesla stock, which as of writing this is above $360/share, a gain of $100 in less than 2 months. The liberal media (but also some on the ‘right,’ too, such as ‘Thorfinnsson‘ and Lobos Motl) got Tesla wrong (just as the liberal media was wrong about pretty much everything for the past 3 years). Just as the left-wing media has been demonstrably wrong under Trump, the right-wing media was wrong during Obama’s tenure, predicting high inflation and dollar collapse due to deficit spending, neither of which came true. This is why you have to separate ideology from investing. Moreover, deficit spending has ballooned under Trump, yet with the exception of Peter Schiff and a handful of other various paleocons, many of these same deficit hawks are reticent. This is why holding politics to the same standard of logical consistency as one would a science, is a fool’s errand.

Predicting this stuff, whether it’s individual stocks, the economy/economics, crypto-currencies, etc. is not that hard and does not require superior analytical skills, but rather is more about filtering out noise. You start by understanding the underlying structure of the system, and then from that build the narrative, and then extrapolate from there as the pieces fall into place. Most people fail in the first step by gathering the wrong data or interpreting the data wrong, which leads to a faulty narrative. Others begin with a faulty narrative/belief and then working backwards look for data that confirms the faulty narrative (confirmation bias).

What if the economy enters recession and there is a bear market? Unless you are using highly leveraged and speculative investments, it’s just a temporary setback. My audacious opinion is, we have entered a phase in capitalism and the economy that recessions and bear markets may be a thing of the past, or so infrequent that it merits re-examination of many of the rules and assumptions of economics that experts hold sacrosanct, such as that economies and markets must cycle.

I am going to be updating my post on prediction market betting, including formulas to determine optimal allocations. And also a post about using 3x ETHs to develop an optimized strategy. But these topics are much more are more technical in nature and take longer to develop.