Do you know TINA?

TINA is an acronym for the phrase, "there is no alternative" and is used to suggest that, in a world of bad choices, one must chose the least bad.

In the past 13 years, the slack monetary policy from the Fed in the U.S. market meant that the S&P 500 Index was returning 16% a year. Could there be a better investment that stocks? Everyone was talking about TINA... even those who didn't know what it meant.

More recently, other investors, especially non-professional traders, discovered the cryptocurrencies market with even higher returns.

Investors, and those that were seeking for more profitable alternatives for their savings, forgot that stocks or cryptos were high risk investments, and even those that were aware of such risks were neglecting them because the outperformance was quite consistent. 

This was the perfect setting for a TINA mindset.

In fact, TINA effect could just be one of the main reasons why some speculative markets delivered sustained results.

I believe that was the case in crypto currencies. I entered this market as it was hitting record highs but this was precisely the first market to sink as the rumors of a recession began to rise.

Global stock markets were down by more than 21 per cent in the first half of 2022, and equities or cryptocurrencies are no longer “simply the best” investment choices.

Some experts argue that markets were overheated because of post-Covid-19 government stimulus. In the U.S. some say that people were using stimulus cheques to trade in stocks on free apps, based on the advice of Reddit forums. With that being true a correction was to be expected.

Volatility, as measured by the CBOE Volatility Index (the fear index) is rising at a gradual pace as a consequence of the sell-off in asset markets.

All indicators suggest that further volatility is expected and we must be prepared for economic and market conditions to get worse before they get better.

The market is now shifting in ways that many traders could never have foreseen, and a sentiment of fear is rising. I am hearing lots of investors (professional or non-professional traders) complaining about instability and poor results. Some of them are giving up on trading because it became too risky.

My arguments are: trading is not for gamblers.

Obviously, trading with such a volatility is dangerous. But a strong inflationary backdrop for economies and markets can be an attractive opportunity for trend-following strategies.

I guess lots of people are earning real money in this bear market. Most of the profit I made in the last 2 months was made in “sell” deals meaning I earned money by investing in price downturns. 

I keep it cool and trade with the same thrive and pragmatism. Fear won’t get you money and if you don’t control your emotions, you’ll be swalloed by market turmoil. 

On the long run, successful investing isn’t just about positive returns and potential upside. You must play short when trends are down and if you are a long term investor you must have a resilient portfolio: one that can withstands downturns and bounce back as market shows some signs of recovery.