Is History Repeating Itself?

Everyday I'm seeing a lot of market related information from various sources. I have presented many bearish side analyses in the past few weeks but let me also present some bullish side data to balance my view point. After all, I'm not a permanent bull or bear in any sense but a investor and trader to both sides depending on the market status at the time. 

The data below is a good one with a convincing historical perspective that we may learn from. My take is that the market may be setting up for the next bull run but most likely we probably will see a lot more downside first before an ultimate bottom is settled in. This may also involve a recession if the Fed is going crazy with the rate hiking as they are telegraming to the market. It is too soon to be sure about which way the market will definitely go. I will be doing more quick swing trading while the market is making up its mind for the next big trend.

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In 1994, I saw a market bloodbath similar to what we're seeing today.

Just like in 2021, we saw a huge rally in stocks and bonds in 1993. They were up 17% and 34%, respectively.

And then bang… The market just puked all over itself the following year.

Surging inflation spooked the Fed. And they started jawboning the market lower.

It was a nightmare.

In those days, brokers like myself got stock data from a Quotron. It's a machine that displayed up-to-the-second securities prices.

I had several hundred stocks listed on my Quotron. And the screen was just a sea of red.

Amazing companies – from Microsoft to Oracle, Walmart, and Cisco – got slammed. They were down 27%, 30%, 38%, and 53% respectively.

I was 22 at the time, and it felt like the end of the world.

But nearly 30 years later, my market experience has given me some perspective.

I realize what happened from 1994–95 was not the beginning of a secular bear market. Instead, it was a short-term change in market sentiment from positive to negative.

You see, there was no issue with the quality of the companies. There wasn't an issue with the quality of the earnings. It wasn't even a slowdown.

People were afraid the Fed would get too aggressive with raising rates and put us in recession.

Of course, that didn't happen. But market sentiment soured. And we entered a cyclical bear market back then.

In my opinion, that 1-year period was the single-best buying opportunity of the entire decade. It was when the risk was lowest, and the reward was highest.

We weren't headed to a recession… we were on the cusp of massive technological adoption.

The internet took off. And we saw companies like Oracle, Microsoft, and Cisco rise 100%, 2,600%, and 7,788% from 1994–2000.

It was a spectacular run.

So today, I'm giving you the benefit of my three decades of market experience.

From managing money as a broker to running a hedge fund… This has been my world since I was 18.

And I'm telling you… what we're seeing now is 1994 all over again.

Painful? Yes. Difficult? Yes.

But the end of the world? NO.

Those who kept their wits and made the right moves between 1994–1995 were positioned to play a truly epic 5-year rally.

So much wealth was created coming out of that pullback…. it was mind-boggling.