per Mac10 article in previous post: Nevertheless, investors have...

per Mac10 article in previous post:

Nevertheless, investors have learned to front-run central banks ahead of rate cuts. Which means global markets are highly overbought just as rates are starting to come down.

You have probably read often on this thread the notion that stocks FRONT-RUN what is to come.

Cisco FRONT-RUN the Internet potential even well before it reached wide penetration level - and the stock crashed post-2000 even while Internet connectivity became mainstream. 20 years after Internet is available across the world, Cisco is no more higher than it was in 2000.

First Solar also FRONT RUN the Solar energy potential, crashed subsequently from 2008-09, and solar has seen recent strong growth after China was able to mass produce them to become cheap for mass adoption. But First Solar remains lower than it was when the concept of its huge addressable market captivated the market.

Tesla was an EV sensation and the stock became a cult sensation and still is, made many multi millionaires in the process and the long term investors owed to Elon Musk but Tesla FRONT RUN the EV potential by being worth more than all legacy autos added together. The huge market cap provided by the market was in response to high 50% growth rates at the time the world was heading for Net Zero. We saw likewise with Lithium stocks that soared big time as lithium prices got White Gold status racing to lofty heights that eventually proved to be unsustainable. These stocks may never regain their all time high prices because that FRONT RUNNING is over.

NVIDIA is the AI poster child sensation, which market cap alone is larger than the whole of DAX, reflecting unbridled optimism about the potential of its AI chips which currently enjoy a technological advantage, but we should only expect that in due time, that advantage would likely be chipped away as competition sets in and lead to price cutting. When that happens or any clue that that that is on the way and its premium valuation would start crashing down as the FRONT RUNNING ends.

Last week, US stocks have been buoyed by imminent Fed pivot as US CPI deflates, once again FRONT RUNNING the Fed rate cut.
What this means is that US stocks begin to impute the Sept rate cut, so by Sept when the Fed delivers it, it is not going to run up any further because of it.

An efficient market would impute the probability of a good or bad event/outcome before it even happens and adjusted expectations relative to reality will impact stocks either positively or negatively.

If an expected outcome is already well publicised, don't expect the stock to fly when it happens because the market already expected it but if the company does not deliver the expected outcome, expect it to be crucified.

That is understanding what FRONT RUNNING is in markets.