Something that often defines your approach to markets is how you came up in the business.
You meet people who started just before the crash of ’87 who are always looking for another Black Monday.
Maybe they came in when the tech bubble burst in 2000. Many of those folks are waiting for the bottom to fall out of this AI boom.
Investors who started in the early ’80s and enjoyed decades of gains at the beginning of their careers are vulnerable to becoming perma-bulls, always thinking the market only goes up.
Specific moments or periods of time can make a huge impact on your “market personality,” if you will.
I’ve had this conversation with so many investors over many years.
A lot of them admit those early experiences played a huge role in how they approach things.
They can’t help it.
For me, it’s the summer of 2003, and it’s the Financials.
I started in this business as a new bull market was getting started after the dot-com crash.
That tech bubble never impacted me. I was still in college, playing baseball and throwing parties.
And I was literally a child during the 1980s, including October 19, 1987.
That historic surge from 2004 through 2007 kicked off my career.
And the importance of the Financials has really stuck with me over the past two decades.
That bull cycle leading up to the Global Financial Crisis wasn’t driven by Technology stocks. Financials were one of the leading groups.
Infamously, in fact.
And many of the Financials that dragged the entire market into collapse are no longer with us.
R.I.P. Bear Stearns. R.I.P. Lehman Brothers.
So, yes, the period when I started my career has impacted my mentality towards markets.
And it’s the Financials.
For me, we don’t have bull markets without Financials.
Other people don’t think of it that way. But I do. And it’s really helped me.
Other people have been negatively impacted by their early experiences – becoming permabears or, worse, Gold Bugs.
The feedback from my early experience is positive.
I value the importance of Financials. And this perspective has served me well.
“We don’t have bull markets without Financials,” is something you’ll hear me say quite often.
That’s likely because Financials were so important to the upside and to the downside during my early years in this business.
Let’s reverse-engineer that train of thought and use it as an analytical tool
If Financials are making new all-time highs, are we in a bear market?
Doubt it.
And that’s precisely what’s happening right now.
Financials just closed at new record highs last week, underscoring that we’re in a healthy market environment.
Permabears are focused on geopolitics, monetary policy, Trump…
It’s hard to keep up. But they’re all wrong.
It’s not about Technology stocks. It isn’t about AI or space or new energy sources.
Bull markets start with the banks.
Financials hitting new all-time highs is what’s important.
Investors tend to be more rewarded for owning stocks rather than shorting them at times like these.
And that’s what we’ve been doing.
This Week in Everybody’s Wrong
On Monday, we talked about U.S. Treasury bonds paying 4% to 5%.
Is that compensation enough to sit out one of the most historic bull market runs in American history?
Here’s why “risk-free” doesn’t mean what you think it means.
On Tuesday, we broke down the first step in our top-down analytical process.
It’s a hard lesson to learn, and it takes years, but you can’t cheat the system.
Here’s how monthly candlesticks help us identify trends.
On Wednesday, we took a tour around the world’s stock exchanges.
There are plenty of exchanges around the world with plenty of secrets and surprises.
Here’s what makes the New York Stock Exchange the most important one on Earth.
On Thursday, we showed you where the next major unwind could happen.
Commercials are holding their highest-conviction longs in Bitcoin ever.
Here’s why we’re maintaining – and might even extend – our Crypto exposure.
On Friday, we talked about stepping away, getting out, and clearing your head.
Our story begins around the Fourth of July in 2016… and it’s a good one.
Here’s how tequila can help you profit if you use it properly.
On Saturday, we welcomed back Grant Hawkridge, our man Down Under, for more data-driven insight on the market.
As Grant explains, one of the strongest seasonal edges is hiding in plain sight.
Here’s why July breaks the “sell in May” rule and is just plain great for stocks.
Have a great Sunday.
I’ll see you Monday morning…
Stay sharp,
JC Parets, CMT
Founder, TrendLabs