I have frequently mentioned that the rise and fall of the stock market seems to have little to do with what is actually going on in the world and this week provided more evidence of this. On Tuesday, Trump in a tweet suddenly broke off talks with Democratic Party leaders who had been negotiating with treasury secretary Steven Mnuchin about another stimulus package. The stock market sank sharply on the news.
Then the next day, maybe in an effort to prop up the stock market which is after all the only economic indicator that he cares about, Trump tweeted would like to provide support in a piecemeal manner to selected industries like the airlines. In other words, he wanted Democrats to agree to just the things he wanted and abandon the things he disliked. This was a non-starter from the get-go and yet the stock market rallied on his words.
This baffles me. It should be clear by now that nothing Trump says should be taken seriously since he just lets loose with what he thinks at that moment even if it contradicts what he said just a moment ago. So why is the stock market responding mercurially to his tweet eruptions, since any stimulus spending requires detailed negotiations with many parties?
Since I have to look at the stock market sometimes, I have also observed that the marketers, or whomever determines rising and falling, are Nervous Nellies, fragile flowers who behave like drunken sailors and lack ability to see more than ten minutes into the future.
I actually find that I am pretty good at forecasting their ups and downs by just imagining emotional over-reactions to the smallest piece of trivial information, such as a leaf falling or Trump posting a one-word tweet. Their MO: any fleeting emotion, multiply it by ten and assume that it predicts the future forever more, then buy and sell based on that.
They’ve actually come up with something called the “covefe index”. This is real: they use it to say how the market will move whenever Trump tweets. I feel sorry for those whose lives revolve around that!
From the Wise Ass On The Hill:
Here is the secret of all stock markets.
(1) If stocks fall and people sell them before they lose too much money, the broker earns a commission.
(2) If stocks rise and people buy them before they cost too much money, the broker earns a commission.
(3) Rinse, repeat.
@2 you missed out:
* If people sell them after they lose too much money, the broker earns a commission.
* If people buy them after they cost too much money, the broker earns a commission.
(Or, I guess, “if people die then when the estate executor has to liquidate or transfer the position, the broker earns a really big commission.”
@hyphenman
It reminds of a Real Estate agents advice on Radio. When the house market is rising is the best time to buy because you dont know how high it will go. Its also the best time to sell because you dont know how long it will continue. When the house market is falling its the best time to buy because you dont know when it will start rising. Its also the best time to sell because you dont know how low it fill fall.
No matter what , keep those transactions happening!
@xohjoh2n
That’s true, you’re absolutely correct.
Being a stockbroker is like owning a casino: the house always wins (unless the casino is run by Trump).
@Deepak No. 5
Yeah, never trust anyone who works on commission.