The central banks have opened up pandora's box this year by quietly buying up the equity markets to the tune of trillions and trillions. This to me seems like no man's land, because how can anybody have faith in true price discovery for anything if new money can be created at will and used to buy up assets? At some point if this continues, the central banks will own everything, and then what?
I closed my short positions again today after suffering another 0.5% loss on average. I've spent a lot of time trying to wrap my head over the possible future scenarios that play out given the unprecedented moves by the central banks to control everything. We really might be in a situation where nothing drops very much anymore as liquidity is slowly drained from the system as central banks keep buying more and more. Not to mention the massive amounts of corporate buybacks done thanks to ZIRP. Seems like profits and growth don't matter much anymore thanks to constant new money entering and the ability of even the junkiest of companies to borrow money at the lowest interest in forever. I've read where the worst run and most shorted companies have been the best performing stocks thanks to the shorts running for their collective lives. At some point every last short will have gone bankrupt sticking to their guns, and then what? We are living in bizarro world.