Market Insight 08/25/18

Remeber the post from 09/06/17?

Current affairs these days cannot get any uglier. Many investors already suffered flash drops in August.

As usual, many ‘experts’ and Wall Street ‘insiders’ creep through the wall of shame calling for bear markets, recession, stock market crash, and so on. Yet, the Dow Jones Index has now climbed up to the current level of 22,000. Investors have to understand that the long term market cycles are not affected by any of media, economic numbers, company fundamentals, and analysts’s predictions.

From 2012, Dow has chunked up more than 10,000. During this,  there were …

In 2012, North Korean Rocket Launch

In 2013, US Government Shut Down, Ukraine War

In 2014, Rise of ISIS, Russian Rumble Tumbles

In 2015, Paris Terrorist Attack, China Stock Flash Crash

In 2016, Brexit, US Debt Ceiling

In 2017, North Korean Missile Crisis


(Market Q, 09/06/2017)

However, still US market remained bullish.

Interesting isn’t it?

The market has already gone through notable geopolitical events

  • US – North Korea summit
  • Ongoing trade war with China
  • Reimposement of Iran sanction
  • Massive drop in cryphto market
  • Finalizing Brexit deal

However, the U.S. market kept on rising, reaching new high after new high. Why the U.S. market would keep rise? There would be hundred reasons and in contrast, hundred reason why the U.S. market could fall.

Keep it simple!

It is rising because people are buying.  “Their economy’s weak, their currency is weak, people are leaving the country”, National Economic Council Director Larry Kudlow said in a bloomberg Television interview on August 4th regarding China. Even, the US government is confident on the stock market.

Below is the 25 year chart of SPY


Below is the logged 25 year chart of SPY


Logged version is not as dramatic as the orginal chart, isn’t it?

Market is a collective result of all transactions from buyers and sellers who use their own rationale. Aboslutely, no one can possibly know the thoughts of the whole market. Thus, one can only view the net result of all buyers and sellers.

What matters most is risk control. Bull markets do no move up in straight lines. There are always pull backs or stalls at times.