Animal Spirits

Good Morning. While I don't believe we have seen the end of this decline, I believe that yesterday was the beginning of the end. The final phase of a decline is the capitulation phase. Up until yesterday people were still trying to catch a bottom but by the end of the day they were dialing 1-800-GetMeOut.
Once the capitulation phase begins we are usually a few days to three weeks away from a good bottom. I believe we could get a nice rally into year end. That is the good news. The bad news is that the capitulation phase is not over and a lot of damage can be done in a short period of time during the capitulation phase.
At some point I will start scaling in to some exposure. If the VIX pops over 40 it will be a no brainer but I have no hard and fast rules. In this phase people's animal instincts take over as they are hard wired to run from danger. While our primitive instincts were helpful in the survival of the human species, they are a hinderance in investing. Hopefully, I will be able to ignore mine and run into the fire at the right time.

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