A short YouTube commentary by Alberto Costa about a developing bearish phase across multiple asset classes (US equities/SPY, long-term US treasuries, gold, and cryptocurrencies). The speaker points out technical indications (e.g., 50-day moving average below 150-day, downward slopes), cites Bitcoin falling from near $70k to ~$30k, and stresses the importance of following a pre-defined investment/trading strategy (examples: monthly dollar-cost averaging into Bitcoin; All-Season portfolio with annual rebalancing). The core message: do not let fear make you deviate from your rules.
Questions this video answers
Alberto Costa
May 22, 2022
50-day moving average below the 150-day moving average, both sloping down
Around $70,000 near year-end, down to about $30,000 at time of recording
All-Season portfolio, rebalanced annually
Chapters
Hello everyone. Welcome to this new video. I know it has been a long time, I was quite busy and I hope to be able to produce and upload more videos in the next future. But today I wanted to discuss with you the situation, the current situation of the market. Because probably you have realized that we are going to a bearish territory. You see here The S&P 500, the spy ETF, it went down a lot. Of course there is the war in Ukraine, that is one of the reason. But regardless, the trend is pretty clear. You see, if you use the moving averages, the blue is below the green, both of them sloping down. That is an indication of bearish market. The 50 moving average below the 150, both of them sloping down. If we look at other markets, the situation is not better. This is for example the bond, right? The 20 year treasury bond, US market is going down as well, even before the previous one. So we started already at the end of the year to have this bearish trend. And if we look at gold, gold has been going up around this time when there was the war, I would say people were afraid. But now it started to go down as well. Cryptocurrencies. Let's have a look at bitcoin. Probably you heard about the Terra, the Luna, those crypto that crash. I'm looking at bitcoin because it's a major one. But you can see that even here we have a clear downtrend, right? We were around the end of the year touching almost 70, right? 70k for one Bitcoin and now we are at 30. That is crazy. So what to do now? The question you may have is, hey, everything is going down. What should I do? That's exactly the question you should not be asking. Now what I said many times in this channel is that you need to have a strategy before things happen. So when they happen, you know what to do. If you start to reason based on fear of what is going on now, what you are going to do is probably making wrong decisions. For example, you may decide to sell even though this was not part of the strategy because the price is going down. That being said, what can we do in this context? For my investment I have some money in bitcoin. In some other cryptos, I have other money. In some investing, long term investing, I would say strategies where I have some of these assets that are going down, what am I doing? Nothing. Nothing. If the strategy I'm using didn't consist of doing something in this situation and the strategy I have, for example the all season portfolio is A strategy where you rebalance annually and you don't have to do anything else. So even though the price is going down, I'm not doing anything else. And that's what you should do as well. Follow the strategy. If the strategy you have implemented is telling you that for example when the 50 is going below the 150, they are sloping down is a bearish signal, then you should sell, then you should sell. But if the strategy is not telling you to do that, then you should not sell. Stop listening to the news, stop listening to people telling you that everything is going to crash. This has been happening times and again and every time after a bearish market, there was a bullish market. So again, what is important in this situation of fear is to keep consistent with your strategy. And if you don't have a strategy, that's another problem. If you don't have a strategy, you should not be investing in the first place. Okay? The strategy should tell you when to enter and when to exit. If you don't know when to exit, then this is a problem. So I suggest you watch my first videos where I was discussing about the ingredients of a strategy. What you should do when you start investing, which kind of information you need. As I said, when to enter, when to exit, what to do if something happened. And again, I know that many of you may be afraid given that the trend is so bad because it's like hey how, how down can it go? Where is the bottom? Nobody knows. Don't listen to people telling you that we bottom already. Just follow the strategy. If your strategy is telling you that you when the 50 for example is above the 150 bot sloping up, it means you can start to buy again. Then do it. But don't change your strategy based on the opinion or suggestion of so called expert that you listen on TV or friends or so on. Just be consistent with your trading or investing strategy. That's the only suggestion I want to give you. And again, I'm in this stuff as well. I am investing in this. I am investing in bond, in gold, in crypto and I'm not worried and I'm not selling and I'm not doing anything because my strategy does not include these actions. For example, I tell you bitcoin, what I'm doing every month is putting a small percentage sdca. This strategy doesn't include a rule saying if the price is going down, selling. So I'm not doing that. The all season portfolio as I said is rebalanced every year. It doesn't say if the price is going down. Sell. I want to stress it again. Don't let fear change your rules. Use your rules to control your fear. That's the key message of this video. And see you next time.