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The Lesson That Took Two Crashes to Learn |
By Prof. Jeffrey Bierman, CMT
I was fully invested in 2001. |
You can tell what happened to me. The dot-com bubble burst, and I watched my portfolio evaporate. |
Then I tried to play that game again in 2007. We ran up, and I got fully invested again. |
We all know what happened there. |
Fool me twice, shame on me. I am done. |
I have 50% cash right now. |
When this market eventually corrects, how many of you will be sitting around wishing you could buy the dip? |
You will have no money to buy anything. |
The Darth Vader Problem |
Some of you have called me Darth Vader. The naysayer. |
Really? I spent most of the year making money long. |
So let me be clear about what I am actually saying. We are not going to crash. The probability of a market crash sits near zero. |
But a correction is different. A 10 to 15 percent pullback is coming. It is a done deal. |
We are overbought. We are overleveraged. |
But we are not at that 2001, 2007, 2008 level of overvaluation. Not from the work I have done. |
The Pattern That Never Fails |
Every time leadership changes at the Fed, markets correct. |
I have studied this across four decades: |
Greenspan to Bernanke: massive correction Bernanke to Yellen: another big correction Yellen to Powell: another correction
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Powell is on his way out. He will be gone by late February. |
Whoever comes in, I do not care. Regime changes create uncertainty about how monetary policy moves forward. That uncertainty always triggers selling. |
And this time, the structural setup makes it worse. |
The Structural Warning |
Fifty percent of capital this year was shoved into passive ETFs. |
People are saying screw stock picking. Just shove money into the market indiscriminately. |
Meanwhile, consumer debt sits at all-time highs. Credit cards, car borrowing, mortgages. All of it. |
When you lean too far to the same side of the boat, it tips over like the Titanic. |
This is the most dangerous time I have ever seen in market history. Not from a valuation standpoint. Not from a psychological standpoint. |
It is from a monetary structural standpoint. |
If there is a regime change at the Fed while everyone leans the same direction, what is your game plan? |
Where is your hedge? Where is your capital? |
Why I Sit at 50% Cash |
Taking on more debt does not make me want to be fully invested at all-time highs. |
The debt will keep going up until one day it just bursts. When will it happen? I do not know. |
But you cannot have this go on forever. It will not. |
We are going to get a minimum 10 to 15 percent correction in the first half of next year. The Fed transition alone makes this likely. The structural imbalances make it almost certain. |
The Lesson That Took 38 Years |
The market taught me this lesson twice before I finally listened. |
In 2001, I learned what a bubble looks like from the inside. In 2007, I learned that the second time hurts worse than the first. |
Now I sit at 50% cash while everyone else chases performance through year-end. |
When the correction comes, I will have capital to deploy. You will be watching from the sidelines wondering how it happened so fast. |
The Genesis COG System tracks exactly when year-end positioning exhausts itself and algorithms stop defending. |
When regime changes create uncertainty, corrections follow. Position accordingly. |
See how Genesis COG detects when structural patterns break → |
Professor Jeffrey Bierman
Creator of the Genesis COG System |
P.S. Genesis COG is about to close out a banner year. We won +83% of the trades we closed since June 1st for an average gain of 6.3%. Not too shabby. But that's nothing compared to what I see for 2026. Because it could be the year your retirement evaporates. |
Click Here to Read My Thesis |
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