Time now to trade momentum

The crack-up boom has begun. Interest rates are still kept at zero by the fed.
We are two years into the business cycle.

Time to trade momentum is upon us. In the middle business cycle, there is no point in being a contrarian. I am taking profits slowly from earlier investments. From tomorrow, I will also be trading momentum with tight stop losses.

A crack-up boom or bust

About 3 trillion in short term debt will roll over this year for the US government. Add another 1.5 trillion of revenue deficit to it. About 4.5 trillion will need to financed this year. Good luck trying to get that financed in the market at interest rates near zero. This game is getting interesting. If fed monetizes a large part of it, US will be in a crackup boom. If it lets interest rates rise and lets markets finance it, the economy will go into tailspin. It's possible that it will try a combination of both. That will still lead to a massive crackup boom in certain sectors, followed by a bust few years down the line. But the early part of the crack up boom always feels good.

It's going to be a rocky ride. I am fastening my seat belts.

Indonesia, 1998 and Egypt, 2011

What really happened in Indonesia before the overthrow of Suharto?
What really happened in Egypt before 2011 before the overthrow of Mubarak?

There was a stock market boom driven by loose monetary policy rather than fundamentals.
When the bust came, food prices were high and currency was in crisis. In the new business cycle, money was no longer going into stocks but rather into daily food items.

Did you know that Egypt was the best performing stock market in the world in 2005 and it did well in years previous to the financial crisis?

Egypt stock market returns in 2005