In this episode of Truth or Skepticism, Tom and Dylan talk about put/call ratios, market extremes in the U.S. and Chinese stock markets, income inequality and other hot topics from the news of the week.
The Significance Of Extreme Put/Call Ratios
Dylan brings up the fact that it’s been seven years since the put/call ratio has been this high. This has traditionally been interpreted that the market is going higher, but right now there are more puts trading than calls, revealing a bearish market sentiment.
Here’s a snapshot of Tom’s view on the high put/call ratios...
At a Glance: Chinese Markets
As for what's happening in China, here are a few quick stats about China’s stock market that were thrown out during the discussion:
- China’s market is up 80%.
- Leverage in the Chinese stock market is up 4 times (from $60 billion to $240 billion).
- $70 billion in new accounts have been opened since the New Year ($30 billion in new accounts since Chinese New Year).
- Most new Chinese account owners are millennials.
- All of them are making more money than anyone in the U.S. due to leverage.
'China’s Bubble Is Great For Opportunists'
Tom believes that once new traders in China get a taste for the stock market (up or down), they will want more and more. They will come back after the bubble bursts.
Tom described the Chinese culture as "Cowboy Culture", meaning a culture of entrepreneurial, hungry, daring individuals, eager and raring to go.
Income Inequality - Busting Myths
Dylan breaks down what he believes are some myths about income inequality.
Tom responds with the sentiment that it’s all opportunity for traders. He suggests we use the mentality that everything (everything!) is an opportunity to trade in the market, including the fact that more people around the world are entering the market.
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