The Profit Gap & Why Now Is The Worst Time To Be Bearish

If you are reading this right now you will survive.

Never too far in time or distance from your next meal and able to nibble, nosh, or graze your way through the intervals between from an endless array of convenient, cheap, and if not healthy, at least filling snacks, you’ll survive.

It hasn’t always been that way.

For much of recorded time there has been a naturally occurring “gap” that happens in the transition period between winter and spring. This is the fallow period between the last frost and the first planting, when food sustenance is lean.

Two hundred years ago this “hunger gap” would have been familiar all over the earth.

Judging from the ice storms back East and the atmospheric rivers that pounded California, it would be reasonable to assume nature hates us.

The truth is much more banal. We are unimportant. As much as we wish it did, nature doesn't know we exist. It’s pragmatically ambivalent.

The purpose of the hunger gap was to cull the herd. To whittle out the sick, infirm, and frankly, the stupid.

This is nature talking here, not me.

The idea was that on the other side of the gap, the survivors would be stronger and better able to breed, sustain, and thrive during the coming year.

But even if you didn’t fall into one of those natural selection buckets, it was a dangerous time to be young or old or alone.

Though man made, the market has it's own rhythms which mimic those in nature.

The time when “bad” markets turn into “good” markets is the most precarious.

It’s when, despite having gone through the worst of it, investors with bruised and battered P&L’s, unable to recognize, to believe, the storm is almost over, succumb to recency bias, depleted resources, and sheer exhaustion.

They throw in the towel.

Not everyone can win. Not everyone can be on the right side of a trade. Not everyone can survive.

That’s the nature of markets.

Nobody rings a bell at the top of the market, nor do they pop champagne the day it bottoms.

But if I had to place my bet, I’d say that winter is ending. There have been signs.

And not everyone made it.

I know, I’ve seen the victims.

Publishing a newsletter comes with it an annoying imbalance of information; you rarely know why subscribers come but almost always know why they go, thanks to the mandatory digital inquisition that must be overcome before being released from Substack’s grip.

I began the Lund Loop almost five years ago, and every year since, I've closed the calendar out with more subscribers than I started with. 2022 was the first year that didn't happen.

Many who signed up for the Lund Loop in December of 2021 - when the market was at all-time highs - are now gone.

Reading their cancellation comments, I am humbled by the generosity of spirt shown by those who, in some cases, having lost it all, still went out of their way to satiate my thirsty nature by letting me know it wasn’t about me.

-Getting out of the trading game for now. May be back some other time. I was very happy with you and your work.

-I've enjoyed and learned a lot from the newsletter, but I'm cutting back on active trading for now.

-Brian, I enjoyed your service, but quit trading early this year. Not planning to do that anytime soon.

-I enjoyed the newsletter, but I'm no longer actively trading.

-I stopped trading. My cancellation has nothing to do with your service.

I hate seeing these folks leave because just as brokerage accounts go bust during the profit gap so do new fortunes begin.

The good news is that the profit gap is not fatal.

If you’re reading this, not only have you survived, you’ve made it through the hardest part.

And though you may not realize it (yet), what you’ve experienced over the past year has made you stronger, more resilient, and better positioned to absolutely crush it once the market gets back into bull mode.

So don’t give up. Not now.

Spring is almost here.

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