Showing posts with label snp500. Show all posts
Showing posts with label snp500. Show all posts

Saturday, October 13, 2018

American stock market-started or "wolves, wolves"?

American stock market-started or "wolves, wolves"?

American stock market-started or "wolves, wolves"?


It is, of course, about the American stock market. "The market pumped up with steroids" is a definition in relation to the S&P500 I have heard especially often in 2012-2014. Since then, the index has grown more than a half times, and the voices of skeptics gradually dissolved in the news noise. When at the beginning of the year the index simultaneously fell 10%, these voices, like, again became audible, however, uncertain. This was followed by a promotion, and skeptics were out of work.

What is the difference between the fall of October? It is the attitude of market participants. When us stocks were adjusted at the beginning and middle of this decade, most participants saw signs of a new fall, similar to 2007-2008. But the fall did not happen. The last 2-3 years the correction was perceived already with no apparent panic, but nervously. And the fall of this week, and it is -7% (!), perceived already quietly, they say, turn down early. That and understandable, too often caution been bailed out deceived. Like in the parable about the boy who screamed, " wolves, wolves." The sheep weren't saved then.

I will not go into details about the set of reasons for this fall: the market is critically expensive, the growth cycle has been delayed for 10 years, and the market itself has grown very well, money rates are rising. The main thing – the growth cycle itself, for these reasons and because of the emotional situation of the market (few people expect a deep correction or reversal of the market down) has exhausted its potential.

This means that the potential of exchange energy has moved to the already ongoing and future sales. And then the current -7% is the beginning. Stock market-a complex system, not balanced, and therefore dramatically changing the paradigm of its behavior. The paradigm of the last 2-3 years is relatively slow growth. The most likely way out of it, as we can assume – a fairly rapid decline in prices. On him and do rate. Not local. With the groundwork months or even years to come. 1 500 – 2 000 p. for S & P500 – more sensible assessment, than current 2 728.