Thread by @Ksidiii

One of the best lessons an older trader taught me was. “If everyone is anticipating negative news & the stock doesn’t drop when the negative news hits, go long”.

The inflation scares and negative headlines continue to engulf the media.

https://twitter.com/ksidiii/status/1445361177429778436

I’m hearing the “nows the time to short” theme.

However I truly believe that the Nov - Dec pension inflows is something that really could hurt the overzealous shorts in this market.

The inflation theme is very strong and is real. But in this low rate environment

It’s going to be very difficult for Q1 flows to go elsewhere. It may sound crazy but equities and CTAs will win the majority of the new year allocations in order to hedge the inflation concerns.

It’s even more of a Bull case that the market has slowly been normalizing to the effects and has not had a “shock scare”.

Every RIA, and “casual investor” is aware of the theme by now.

I understand that inflation has hurt markets before. It is important to understand

that the avenues for fund flows have changed tremendously in this new market. Larger positioning will focus on TIPS/ CTAs / and of course U.S equities.

One could argue that the health of the market is compromised and it’s a walking zombie (thanks captain obvious).

That argument is as invalid as the guy that’s shorting a tech company due to a bad P/E ratio.

Market/ economic health is different than fund flow/ positioning.

Some sectors will be impacted in a bad way and we may see small market pullbacks (like we have been seeing)…. But new flows are limited in where they can go and the absolute last thing they will do is move to cash.

**Obviously not investment advice**