What’s Waiting on the Sidelines

A lot of money is waiting for a clear signal… a confirmation that it is over… a rise in index values and stock prices that will be missed if investors wait too long. A lot of money is waiting for a clear signal… a confirmation that it is over… a rise in index values and stock prices that will be missed if investors wait too long. [Outsider Club logo] What’s Waiting on the Sidelines [Adam English Photo] By [Adam English]( Written May 23, 2022 Times like these, eh? We’re all living through them, but they’re hard to talk about in a meaningful way. It’s easy to use reductive sayings. Anyone commenting on the markets tends to fall back on these pithy aphorisms even though they don’t actually offer much guidance. “Buy the dip” some say. “Blood in the streets” certainly applies too. Sometimes they’re a bit more subjective. It’s common to hear that bear markets don’t end until there is “capitulation.” On the surface, this doesn’t mean much. That’s one to dive into, though — one that we may be able to anchor in reality, at least to some extent. It’s one of the few stock market sayings that implies some kind of fluctuation… a final act that heralds a change in momentum. But what does that really look like? Here’s a partial answer. ---------------------------------Advertisement----------------------------------------------- New Cash Law Will Be Disaster for Savers Most people think inflation is today's biggest financial risk. But sadly, that doesn't even begin to explain what is about to happen. According to tech expert Jeff Brown, the biggest headlines of 2022 will have nothing to do with inflation... and everything to do with the huge change to our money very few Americans see coming. [Go here to see what's about to happen before it's front-page news in every newspaper in America.]( -------------------------------------------------------------------------------------------- There are two aspects of capitalism with a stock market-based system that people don’t really talk about. First off, destruction of capital is important. Risk and reward are inherently linked — or at least they should be. For markets to work, people need to be able to move in and out and take losses with the expectation that a new, worthier investment will pay off later. That brings up the second aspect. Capitalism and market economies are a way to fiddle with time. Quite literally, this is monetary time travel. In this sense, money invested today is a way to move wealth from the past to a time in the future. If you bought Tesla, Amazon, or whatever else is way up over the last decade, you traded money for equity with the expectation to trade equity for money later. This gets a bit more obvious when it comes to housing loans or bonds. Borrowing is a way to bet that, after interest, what you cannot truly afford is better to own now than waiting to buy it in the future. ---------------------------------Advertisement----------------------------------------------- New Battery Is Quickly Transforming a $3.3 Trillion Market The "Newton Battery" is ushering in a new era in power storage. Using just gravity, it powers the grid better than any other battery on the market. The Newton Battery is cheaper to produce because it's only made of steel and concrete — and it poses no threat of fire or explosion. In short, it’s THE best solution to the world’s energy storage problem. And it’s a huge opportunity that spells colossal new wealth for early investors. The best part is that the mastermind company behind the Newton Battery just went public... [Be one of the first to see all the details.]( -------------------------------------------------------------------------------------------- When we’re in a broad bear market, which we most certainly are today, the tolerance for how far into the past or future people are willing to assume they’ll get a certain return collapses. Investors abandon past preconceptions and accept the price they can get today for speculative investments they assumed would pay off over a far longer time frame. This is the true nature of capitulation that people are talking about when they discuss the end of a bear market. It is when speculation, risk and reward, tolerance to wait and see how things pan out, and so on and so forth collapse as far as they will go. In the stock market, we track that with share prices, price versus earnings — both projected and trailing year over year — book value, etc. Capitulation is a holistic concept in this sense. It’s not something you can call ahead of time. Clarity is only possible looking back. But we can get a sense of it looking forward too. We talked about this when I wrote about how inflation peaks signal a period of outsized gains. There are other signs of building capitulation and what the markets will look like afterward. According to Bank of America data, U.S. investor cash holdings are up 6.1% and have risen to their highest levels since 2001 based on a survey of 288 investment professionals who oversee a total of $833 billion for pension plans, insurance companies, asset managers, and hedge funds. ---------------------------------Advertisement----------------------------------------------- Biggest Lithium Breakthrough in History Inside one of the world’s most advanced facilities, a small 65-member team has perfected the unthinkable...This genius team of scientists has developed a technology for creating an infinite supply of super-rich lithium right here in America... WITHOUT having to mine a single ounce.That’s right! No mining at all.How is this possible? And how could it make early investors 10 times their money or more?[This developing story continues here.]( -------------------------------------------------------------------------------------------- Retail investors — meaning you, me, and everyone else who doesn’t work with a 10-figure account on behalf of an investment firm — pulled a net $87 million out of equities last week versus a one-year average of a $3.3 billion inflow, according to JPMorgan. Stocks, bonds, cryptos, and anything else you can name are all suffering. Money is flowing out, and a majority of people in the market are willing to sell at a loss rather than bet on a gain down the road. Does it signal a bottom? Hardly. Does it mean that something else won’t come along that pushes the floor lower? Certainly not. But this is how a bear market resolves. There is a lot of money on the sidelines waiting to flood back into the stock market. A lot of it is waiting for a clear signal… a confirmation that it is over… a rise in index values and stock prices that will be missed if investors wait too long. We’ll keep watching for the true signals of a bottom and letting you know about investments that are worth making now before money floods in and the big gains quickly come and go. Stay tuned. Take care, [Adam English] Adam English Editor, Outsider Club [follow basic]( [@AdamEnglishOC on Twitter]( Adam's editorial talents and analysis drew the attention of senior editors at [Outsider Club](, which he joined in mid-2012. While he has acquired years of hands-on experience in the editorial room by working side by side with ex-brokers, options floor traders, and financial advisors, he is acutely aware of the challenges faced by retail investors after starting at the ground floor in the financial publishing field. 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