If you’ve been following along, it’s not every day I agree with journalists.
Me agreeing with bank analysts is also something you won’t see often.
However, this week they did something that really made me stop and say, “Yes, that is 100% accurate.”
Here’s a Financial Times headline from Friday morning:
Bitcoin will go up if more people buy Bitcoin and won’t if they don’t: Citi
“A bitcoin is worth what the next person will pay for it,” the FT journalist, Bryce Elder, writes. “The same can be said of a lot of assets.”
Yes. Yes. And yes again. All correct and accurate reporting.
I never thought I’d see the day. But here we are.
I agree with Bryce. And I agree with the Citi analyst he’s quoting.
As far as the rest of the article goes, I don’t know. I don’t read those things.
But the headline and first sentence? Spot on!
And that’s how we want to think about markets, whether it’s Bitcoin (BTC), shares of Apple (AAPL), or the direction of Gold.
If there are more buyers than sellers, prices go up.
The opposite is also true too: If there are more sellers than buyers, prices go down.
Now, of course, for every buyer there must be a seller.
But there aren’t an equivalent number of buyers and sellers at every price.
And that’s where the market’s process of price discovery comes into play.
We all know of many people – professionals and otherwise – who didn’t own enough stocks…
Or sold their stocks too early…
Or, worse, have been shorting the market during one of the greatest rallies of all time.
In most of these cases, I’d argue they were scared away by arbitrary things such as valuations and/or geopolitics.
Those things can be scary, especially for people who are bad at math.
But if you’ve studied markets, you’ll see that if there are more people buying, prices go up.
So that’s all we focus on – the buyers and the sellers and how many of them are left to buy, or to sell.
Usually, we’ll point out how everybody’s wrong. But, in this case, they’re right – the journalist and the analyst.
Prices will go up if more people buy. And they won’t if they don’t.
Facts only.
Well done, FT journalist. Well done, Citi analyst.
Let’s see if we can make all this truth-telling a habit.
I’ll take the under…
This Week in Everybody’s Wrong
On Monday, we broke down a huge misconception about “good companies,” “fundamentals,” and price.
Markets move based on mispositioning, folks.
Here’s why we continue to look for opportunities in speculative high-growth tech stocks.
On Tuesday, we talked about the sloppiness of the modern mainstream media.
These folks will lie to you – deliberately, and a lot, but often without even knowing it.
But, around here, we have standards.
On Wednesday, we discussed a real headline from a real newspaper.
The Wall Street Journal posed this wonder: “Why Are Stocks Up? Nobody Knows”…
On Thursday, I posted a defense of Jim Cramer – say what you will, his first book is a classic.
And, in fact, Cramer is onto something lately.
I’m talking about “short squeezes” and our repeatable system to profit from them.
On Friday, I wrote the one about Rasheed Wallace.
Rasheed is a basketball legend, a low-key genius who understands what he’s looking at and knows how to express it.
“Ball Don’t Lie” is the truth…
On Saturday, Senior Analyst Jason Perz provided a rewarding read at the end of another good week.
Jason goes deep on self-awareness and human behavior.
At the end of the day, “trading in good faith” is a true path to freedom.
Have a great Sunday.
We’ll see you Monday morning…
Stay sharp,
JC Parets, CMT
Founder, TrendLabs