So US markets had 3 days of green then went up over 3% overnight and you read some things that made you turn bullish?
Wow, what a surprise!?!
Not trying to be a smartass but do yo think there's something to that?
I'd be willing to bet that if you read those same articles on Saturday morning after NDX sold off around 4.5% you wouldn't have been so easily convinced. And you certainly wouldn't be here telling me the tech bubble is ready to keep 'roaring on'
Not trying to start any conspiracy theories but you do understand how much of the media outlets are owned by Blackrock and Vanguard?
Markets are run on fear and greed so perhaps there may be some conflict with the dominant forces behind overall sentiment?
I will agree with you on one point though and thats that the Fed may never go through with whats currently on the table. However, the reason I see that playing out is via another type of deflationary event eg crash, deflationary spiral.
Too many people think a crash is just a one day wipeout, yet the biggest sell offs have played out over multiple years. Both ways can inflict plenty of pain but long, slow sell offs will completely ruin the many new investors that can't put two and two together before its too late.
There is actually plenty of reasons to be bullish atm but none of them compare to 2 things IMO - liquidity - cost of money
We are coming into a period where liquidity is drying up and the cost of money is increasing.
So now you have large instos that can't put the same amount into the market as when rates were lower. If their assets eg property start to decrease in value, then collateral is lessening too.
Even if they have the same amount of cash at hand they can't borrow the same amount to invest.
So do you think this creates more or less demand in the markets?
To add to that the cash at hand will start to be better used in interest bearing assets (competition to equities) - this also takes down the amount they have to play with.
This obviously means less buying power but how do they remove what they can't afford?
Obviously some selling needs to take place.
This is where problems start.
But then what if the sell offs were a little more severe than expected?
This would trigger a cascade of selling and obviously lessen collateral which would again trigger more selling as margin requirements would be breached.
You can see where this is going, right?
Theres plenty of very intelligent financial commentators out there that can find just about any data to support their own confirmation bias (bullish or bearish) so I guess it's up to each investor to filter through it and find the info that sits right with them and their own investments needs/timelines/goals.
Obviously ALL the cash in markets doesn't just up and leave in times like these. Plenty is rotated into stocks/sectors that can flourish in the coming conditions, however the main underlying factors ahead remain very much hurdles for most companies/sectors so choose wisely and be very cautious going forward.
(20min delay)