April 11, 2024 Grandpa checks in

Last night, the CPI for March was released, slightly exceeding expectations. After the data came out, the market expressed some concerns about the next interest rate cut. The current probability of a rate cut in September is 46%, and the probability of a second rate cut in December is 33%, while the three rate cuts mentioned earlier may not be realized. In fact, from the perspective of the US stock market, there has been a strong bull market since the end of October last year, including the stock markets of many other countries and risky assets such as Bitcoin, which have staged a crazy rise in advance.

After experiencing the previous flooding, investors have understood how risky assets will perform after interest rate cuts. Although the market has fallen after a long period of interest rate hikes, the fundamentals of the economy show no signs of collapse, so market confidence has recovered faster than ever before. Why do I say that it will take 25 years for the big bull market in the B circle? It is precisely because we have not started to cut interest rates yet. The resonance of capital release and halving cycle will bring greater confidence to the market next year. If this round of bull market is driven by ETF funds, then next year's big bull market will be the overflow of US stock funds, and the volume is not at the same level.

In the past month, I frequently warned of risks, and even reduced my positions at the risk of continuous selling at high prices. This is not because I am not optimistic about the 25-year outlook. At this point, the relative price is definitely high, but it is not enough for the ceiling of the big cake. If you have sufficient cash flow, and you are not afraid of even the B circle funds going to zero, then there is nothing wrong with long-term thinking. At most, you can wait another year. However, from an operational perspective, while reducing positions at relatively high levels, I also feel that before the rate cut is confirmed, there may be a high point in market sentiment, and there will be a considerable wave of retracement at that time.

Returns and risks are always relative. Since I hope to get more chips in the market, I am also prepared to lose more profits due to reducing positions. Just like the previous bear market, if you just want a lower price, you may miss the opportunity. In fact, you are using potential opportunity costs to exchange for a low price. Objectively speaking, the market has entered a confused stage. We try to make decisions based on the high and low prices. From the perspective of capital, the current online projects have a circulation market value of hundreds of millions, which I think is high.

Thank you for your attention and likes.