October 7, 2021, 12:17 pm EDT
Bulls Are Out Again?
Lawmakers or politicians like the bulls. They would use the given power to make the bull market running as long as possible. By increasing the debt ceiling or limit, the crisis is solved or gone for now. Then, stock markets cheered up with +500 points in DJIA or +1.5% gains for all major indexes this morning.
However, we pointed out in the Debt Crisis article that the real problem of the US debt has been accumulated to the skyrocketing level never seen before. It gets much worse in the past 10 years.
Increasing or ignoring the debt limit is like turning off the fire alarm because it made an annoying noise when the temperature, smoke, or fire threat is nearby. Another example is to take pain-killer or drugs when the body gives you a warning about the painful feeling. Tylenol, Aspirin, or the most effective drug opioids may reduce the pain temporarily, the real problem is still there. The time will come to terminate the object if the issue is not solved from the root.
This is our view regarding today’s rally made by the US congressmen. Traders and investors also understand the reality. But, they may think they can still ride the train before falling off the cliff.
Our strategy is to avoid frequent tradings and keep a diversified portfolio. Equipping with a sense of crisis knowing that there will be a fire behind the scene. This mindset will help us to get out the trouble quickly enough when it happens.