About time a piece of bad news made the US markets decline. This bad news = stock bounce has been confusing the hell out of me.
3 Likes
I wonder if this plus earnings will trigger a bigger correction.
I’ve thought that a few times but the market keeps on rallying.
1 Like
Honeslty I’m so confused. No matter what news in continues to rally, I thought today there would be a correction but it seems to be recovering to yesterdays close now
Why do you think that is?
1 Like
Whilst now a little dated, some interesting thoughts here:
1. Bearish view:
The reason why the stocks markets have been recently rallying (bear market rally) is down to the central bank actions of the FED, BoE, BoJ, ECB etc. and what they have done in terms of interest rate cuts, Quantitative Easing, such as ETF purchases of bonds (FED) and equities (BoJ). This has injected liquidity into the markets, for instance, the bonds being bought by the central banks have reduced the yields (some bond yields are expected to be negative) and therefore investors are simply seeking higher returns or at the very least to preserve their wealth from inflation so have been buying riskier equities.
Millions (and trillions) have been pumped and will be continued to be pumped into the markets. This has happened on the same days that the negative headlines such as record unemployment figures, lockdown effect on businesses and so on have been released. This explains much confusion and mismatch between the financial markets and what is going on in the real economy.
2. Bullish view:
The bullish view is that the market has already priced in the negative news and the rally is a response to equities being oversold. There are some expectations of a short “v” or “u” shaped recovery, that businesses will bounce back, a vaccine will be on the way and so on.
6 Likes
Thanks for the write up! Much appreciated
“It is unclear whether other European nations will follow the example of Denmark and Poland, but it is unlikely that authorities in the UK, the Netherlands, Switzerland, and Luxembourg will do so. All four have provisions making them attractive to businesses that also allow them to be registered offshore.”
7 Likes
More unanticipated effects as the problems ripple out to hit other industries.
https://www.bloomberg.com/features/2020-flower-industry-crash/
Even food and farming is being hit hard as traditional supply chains and markets are disrupted (e.g. farmers unable to sell milk). It’ll be very interesting to see if the market manages to ride out the coming torrent of bad news without panic.
Yesterday I went against my investment plans and thinking and sold half my holdings. Not a logic or analysis backed action, I just couldn’t shake the feeling that the market will plunge again. I hope to buy back in to everything I sold, just can’t see passed an ongoing negative fallout over all this.
7 Likes
Some mobility data from Google - interesting to cross reference to investment ideas:
I had the same thought process. I’m going to drip money into stocks every month but I sold most my positions during last weeks rally
1 Like
It’s an excellent time to drip feed money into your investments, if you can that is. Now is the worst time to take risks unless you are very comfortable with the extra volatility and unknowns.
I’m doing some regular investing to average out my holdings. Not always getting the bottom but that is to be expected.
I’ve been making some short term positions as well to jump on some momentum stocks but generally trying to stick to a longer term view.
Great companies at a good price! 
8 Likes
I think it’s different for each. Jubilee and Bushveld got over punished in the sell off when market crashed, it seems to be just that correcting back to fair value. For Greatland Gold, the speculation is the results are going to be very good from drilling campaign by Newcrest. Results coming end of month will prove this theory. Uranium spot price is going up due to supply constraints and that’s driving yellow cake. As soon as cigar lake mine was mothballed, uranium price moved up steadily
Every little helps
8 Likes
Couple of interesting discussions:
Investors baffled by soaring stocks in ‘monster’ depression
(Gift link: first three people to open it can read for free)
The divergence between the flying stock market and the dying economy is so extreme it is leaving many analysts scrambling for explanations.
…
Technology stocks are once again leading the rally, but even travel and leisure stocks have jumped 24 per cent from the lows, trimming their decline this year to 37 per cent. Investors appear to be writing off 2020, focusing instead on the prospects for an economic normalisation in 2021, analysts say.
…
History also offers some encouragement to the optimists. Bespoke Investment Group crunched the numbers on every big US stock market slump, and found that once equities had clawed back over half their losses, that had tended to signal that the lows would not be retested.
One notable exception, however, was after the crash of 1929 and the Great Depression. The US stock market rallied over 44 per cent from the November 1929 low through to March 1930 before sliding another 80 per cent, and did not reclaim its 1929 highs until September 1954.
10 Likes
It’s all become clear to me now. I understand that I dont understand
11 Likes