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Dare I contemplate that thought for a moment? But it has happened before and it could happen again.
But remember success in the markets is not about being right or wrong – it is about unashamedly making as much money as possible but also as safely as possible.
My experience is that there is an inverse relationship between risk and experience. That is I see inexperienced traders attempting CFD gymnastics with not even a skerrick of experience. Highly experienced and skilled investors measure and manage risk. This is what Mat Barnes is so succinctly enunciating in his article today.
As markets climb higher we climb the risk curve. Take a look at the All Ords chart below for the last couple of weeks:
click to enlarge
I have postulated a possible scenario – for the point of discussion - although one just never knows!
At the March low I considered the risks were still high. The market was at risk of going lower. And if I pick the bottom of the market I always feel uneasy as I feel literally dead lucky. But technically the March low had no consolidation of note.
If you did not buy at the March low why would you buy in the last few days? Are you not buying up the risk curve?
Be patient. If what we are seeing is a new long sustained rally – which I very much doubt – then wait for a pullback. We know they always come.
Money is made not by buying at the exact low but by taking out the big chunk between the bottom and the top. We are nowhere near the beginning of the big chunk. You have not missed the bus. One of the beauties of wave fours is the bus has slowed down and we can board easily, with safety and then go for the nice long ride.
Enjoy the ride
Tom Scollon
Chief Analyst
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