War of Attrition: Strategies for Thriving in Times of Crisis through Investment

This chart contains data going back to 2000. The main point here is to illustrate that when markets trade at the level they are at currently, a long-term opportunity is brewing. This is a war of attrition.

Every time the Dow traded deeply into the oversold ranges, the markets experienced a solid bullish phase. At this point, the Dow is trading in the highly oversold Zone. However, given the current atmosphere, we suspect a long-term bottom won’t take shape until all the indicators are trading in the insanely oversold ranges; the teal lines in the above picture show these zones. When the markets are trading at extreme levels (oversold or overbought), sentiment readings play a pivotal role.

Conclusion

There are some interesting long-term developments in this war of attrition:

This Market never experienced the tail-end move. You can see this by looking at the MACDs in the above chart. Usually, there is a rolling top formation; in this case, the MACDs just topped out sharply and dropped. When this occurs, it indicates that on the next bull run, the markets will trade in the overbought ranges for an extended period.

The MACDs are on the verge of putting in a new 14-year low. One of the requirements for a FOAB is the MACDs have to (at the very minimum) put in a new 12-year low. In the end, it’s battle-tested investors that combine Mass Psychology with Technical analysis that are likely to survive this war of attrition. The early bird gets the worm, the late one the bullet.

Phenomenon of Financial War of Attrition: Insights from Empirical Studies

Financial War of Attrition” by George M. Constantinides and Milton Harris (1996).

The present study proposes a theory of financial war of attrition, demonstrating the impact of the number of competitors on a company’s value and cost of capital. The competition for control of a company is conceptualised as a dynamic game of incomplete information, in which participants must determine if they will make a takeover offer or withdraw from the contest. The game concludes when a single competitor makes a successful bid or all competitors opt to drop out

Dynamic Price Competition in the Market for Corporate Control” by Paul A. Gompers and Josh Lerner (1997)

The authors research delves into the examination of price competition in the Market for corporate control. They discover that price reductions are common and persistent in takeover battles, signifying a competitive struggle among bidders. The study shows that the pricing competition is influenced by various contest features, such as the number of bidders and the level of competition, as well as target firm characteristics and stock market condition

Price Competition in OTC Derivatives Markets: An Empirical Analysis” by Massimo Massa and Johan Sulaeman (2007)

This paper studies the relationship between price competition in over-the-counter (OTC) derivatives markets and credit default swap (CDS) spreads. The study found that increased competition among dealers leads to lower CDS spreads and that the effect is stronger for less liquid CDSs. The results support the idea that competition benefits markets that are less efficient.

War of Attrition in the Market for Investment Banking Services” by Fabrizio Ferri, René M. Stulz, and Rohan Williamson (2007)

The authors analyse the Market for investment banking services through the examination of fees charged for M&A advisory services sheds light on the competitive dynamics of the industry. Our findings suggest that the competition between investment banks is intense, characterised by a lowering of fees to secure business. The level of competition is determined by various factors, including the number of banks bidding for a deal and the magnitude of the deal. Moreover, the study indicates that the effect of competition on fees is more pronounced for smaller deals, aligning with the notion that less efficient markets benefit more from increased competition.

Other Articles of Interest

War of Attrition: Strategies for Thriving in Times of Crisis through Investment

This chart contains data going back to 2000. The main point here is to illustrate that when markets trade at …
Read More

February 5, 2023

Dow Jones Outlook: Understanding the Dangers & Rewards of Crisis Investing

The monthly chart of the Dow highlights the Path it and general markets follow could be similar to the 73-74 …
Read More

February 4, 2023

Financial Stress: The Surprising Opportunity for Savvy Investors in the Stock Market

Contrary to popular belief, financial stress can present a unique opportunity for savvy investors in the stock market. While it’s …
Read More

February 3, 2023

Financial anxiety

Short-term stock market outlook The following projections were curated from the November 28th Market Update, providing an overview of our …
Read More

February 2, 2023

Investment Opportunity & Market Crashes

Irrefutable Evidence that Crashes Equate to Investment opportunity RGLD is a Gold stock. We purposely selected this stock to illustrate …
Read More

December 30, 2022

Copper outlook VIA CPER

Courtesy of tradingview.com In the August 27 market update on the copper outlook: we stated that Copper (another leading economic …
Read More

December 5, 2022

Existing home sales

One can see that while the median price has been rising, new existing home sales have been in a general …
Read More

November 28, 2022

Stock Market Crashes in History

A study of the stock market crashes in history reveals one upbeat fact; the ones that lost the most were …
Read More

October 3, 2022

Stock market crash history

An examination of any stock market crash history reveals one stunning fact. Investors that jumped in and bought when panic …
Read More

September 26, 2022

Broad Market Review

One has to understand the difference between the forest (broad market outlook) and tree perspective. Too many traders are subscribing …
Read More

September 19, 2022

Worst 25 year period in stocks?

No, it’s not the worst 25 year period in stocks; it’s actually worse. Think almost 50 years, which means a …
Read More

September 9, 2022

Russian Update: Ruble, Neon Gas and more

Russian Update 1: World’s Top Performing Currency? The Russian Ruble, now the strongest currency in the World, has been trading …
Read More

July 29, 2022

Summer Stock market Rally?

We expected the markets to correct last year, but it was projected/expected to occur in two phases. The sanctions against …
Read More

July 20, 2022

Intelligent Investing Strategies

To win, you have to have a stake in the market; it does not matter whether you are right or …
Read More

June 17, 2022

Trading volatility: A whole New Stock Market Game

Trading volatility will keep rising as we are in the battle of the trenches phase. This means the situation will …
Read More

May 27, 2022

Stock Market Crash 2022

In addition to the many reasons we have provided in previous updates, two extra factors could lead to a more …
Read More

April 30, 2022

Trading Journal; The invaluable tool for traders

We will start by listing a series of quotes from recent market updates. If you have not kept a trading …
Read More

March 20, 2022

Trending markets; Only The Trend is your friend

Trending markets currently favour value stocks and growth stocks that took a beating in 2021. Certain commodities like Palladium and …
Read More

February 17, 2022

Stock market experts know Nothing

Last week’s bullish readings dropped to 22, and this week’s readings stand at 26. Neutral readings continue to trend upwards, …
Read More

February 17, 2022

Stock market technical analysis

Stock market technical analysis on its own produces mediocre results. However, when combined with Mass psychology the results are outstanding …
Read More

February 16, 2022

Market tops occur when the masses are in a euphoric state

Even though things are viewed as bad now, these times will be viewed as the good old days in the …
Read More

February 14, 2022

• 1
• 2
• 3
• …
• 12
• ›

The post War of Attrition: Strategies for Thriving in Times of Crisis through Investment appeared first on Tactical Investor.

otc
copper