Asymmetric market

The market has been correcting for sometime and there is a great deal of gloating by shorts. Chronic bears have found new followers. But if you look at the markets objectively,one of the first thing you will notice is asymmetric nature of market moves. Given the recent weakness, you would expect great number of stocks down majorly. However if you run a scan of stocks down 50% or more in a month ( priced higher than 5 a month ago) as of now, only 3 stocks are on that list.

Given the amount of ink which flows from chronic bears, you would expect sound logic and methods. But most of what is offered as bearish strategy is same general opinionated gibberish and extreme scenarios. Most of them do not have a clearly defined methodology. They have strong opinions but few valid methods. As an individual speculator one must take in to consideration the simple fact that in majority of time even a poorly designed long strategy will beat a well designed short strategy. You can seat on the sidelines during corrections or bearish phase and still, over the long run, beat the pants of those who short or follow a combination of long short strategy.

Structural odds in the markets are against the chronic bears. There are very few periods when bearish strategy works. Markets across the world have a documented positive bias over long run. If the chronic bears are so intelligent, why they do not understand it is a great mystery.

But it is paradox that in markets as well as in general life negativity sells substantially more than positivity in the short run. Newspapers and magazines survive on negativity. Death, destruction, misfortune, scandal, doomsday scenarios, and extreme projections is what attracts most people.

But the story of mankind is written by those who bet against such negativity. History is about optimism and those who bet against negativity and panic. Chronic bears and pessimist do not even make it to the footnotes in history.