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Why the stock market will rebound and why you should try to get out anyway....
Friday, February 05, 2010
UPDATE: 4:51pm 5 Feb 2010 - Extremely scary headlines on Bloomberg's home page :
•Stocks Plunge, Euro Falls, Bond Risk Soars on Jobless Claims, Country Debt
•Trichet Struggles to Convince Markets of Europe's Solidity Amid Greek Woes .
Suggesting great instability in the markets. Will the market exhaust its downside selloff as I suggested or are the so-called fundamentals so precarious we are on the precipice of a new crisis? Scary times isn't it?
Volatility has returned to the stock market. Yesterday night the DOW crumbled 268pts sending shivers down the spine of the steadiest investors. Last week it had 2 consecutive days when it fell by 200pts. I like to listen to "after the fact" explanations of all these falls. 2 weeks ago the falls were largely blamed on China for its tightening on bank lending. Last week's fall was blamed on Obama's newly proposed banking regulation also known as Volcker rules. The sight of Volcker standing by the side of Obama spooked markets and triggered a 2-day 400+ point selloff of the DOW. ...at least that was what CNBC said. The more sinister conspiracy theory version of this is Goldman Sachs wanted to show the US govt who's boss and sank the market with its program trading softwares - Volcker was from Chase a rival financial firm. Hmm...don't worry I'm still thinking logically, I don't believe in that piece of conspiracy theory, just wrote about it to show how creative people can get when it comes to explanations. Actually, I believe all these after the fact explanations have nothing to do with most of the market movements -while the market moved down, there was plenty of good news from the earnings front and economy that had no effect on the market. When the market moves down, journalists will pick the most plausible explanations to write or talk about.
Friday, February 05, 2010
UPDATE: 4:51pm 5 Feb 2010 - Extremely scary headlines on Bloomberg's home page :
•Stocks Plunge, Euro Falls, Bond Risk Soars on Jobless Claims, Country Debt
•Trichet Struggles to Convince Markets of Europe's Solidity Amid Greek Woes .
Suggesting great instability in the markets. Will the market exhaust its downside selloff as I suggested or are the so-called fundamentals so precarious we are on the precipice of a new crisis? Scary times isn't it?
Volatility has returned to the stock market. Yesterday night the DOW crumbled 268pts sending shivers down the spine of the steadiest investors. Last week it had 2 consecutive days when it fell by 200pts. I like to listen to "after the fact" explanations of all these falls. 2 weeks ago the falls were largely blamed on China for its tightening on bank lending. Last week's fall was blamed on Obama's newly proposed banking regulation also known as Volcker rules. The sight of Volcker standing by the side of Obama spooked markets and triggered a 2-day 400+ point selloff of the DOW. ...at least that was what CNBC said. The more sinister conspiracy theory version of this is Goldman Sachs wanted to show the US govt who's boss and sank the market with its program trading softwares - Volcker was from Chase a rival financial firm. Hmm...don't worry I'm still thinking logically, I don't believe in that piece of conspiracy theory, just wrote about it to show how creative people can get when it comes to explanations. Actually, I believe all these after the fact explanations have nothing to do with most of the market movements -while the market moved down, there was plenty of good news from the earnings front and economy that had no effect on the market. When the market moves down, journalists will pick the most plausible explanations to write or talk about.
