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Stock Mania Rages On

01-17-2018

The early going saw the market gain about 0.5% pretty much across the board, as yesterday's reversal amounted to a whole lot of nothing. Beneath the surface, tech regained its red-hotness, particularly semis, despite the continued evidence of poor results on the part of Apple. In the afternoon the market kept on ramping higher, as the major indices all gained about 1%.

Away from stocks, green paper was stronger, especially versus the yen and euro, oil was a nonevent, fixed income was lower, and the metals were just ever-so-slightly weaker until a late day selloff took them lower by 1%.

The Chain Letter Postman Only Rings Once In crypto land, pain was handed out once again, with Bitcoin trading as low as $9,500 and the cryptocurrency market cap falling to $430 billion (before the complex bounced). I'm sure a tremendous number of amateur speculators are faced with very difficult decisions about what to do. Making money looks so easy when whatever you happen to own is going up at warp speed, but when you really don't know what you're doing and the thing you're playing with has no value, that is a recipe for a world of hurt.

Learning how to speculate always costs something. The tuition comes in the form of lessons learned after losing money, and can be quite expensive, as the speculative novices in Bitcoin et al. will learn. I don't say that because I wish them any harm. I actually happen to know a couple of people in that boat, and I feel bad for them. But no doubt there will be a large group who lost way more money than they should have been playing with in the first place.

A Little Psychology Can Go a Long Way In any case, thus far the carnage in that arena has not mattered much to anything else. Not that it should, just that it hasn't, although I have a hard time believing it won't have some impact on psychology in some way.

Positions in stocks mentioned: long AAPL puts.