• 22 hours Trump Was Right About The Dollar
  • 1 day Is Silver Gearing Up For A Rally?
  • 1 day World’s Largest Hedge Fund Turns Bullish On Gold
  • 1 day It’s Time To Spend More On Clean Energy R&D
  • 2 days Contrarian Investors Are Beating The Stock Market
  • 2 days Bulgaria’s Revenue Agency Falls Victim To Biggest Cyber Heist In History
  • 2 days Amazon Faces European Union Anti-Trust Probe
  • 2 days Commodities Are Having A Stellar Year
  • 3 days Bezos’ Next Big Project Could Be Worth $100 Billion Per Year
  • 3 days 3,600 Years Later, Climate Change Turns Mammoths Into $40M Market
  • 3 days Tesla, Apple Claim China Is Stealing Intellectual Property
  • 3 days EV Giants Duke It Out For Battery Dominance
  • 4 days Tech Billionaire Takes Aim At Google
  • 4 days Chinese Police Bust Largest Ever Illicit Crypto Mining Operation
  • 4 days Expect A Pullback Before Gold's Next Major Rally
  • 4 days Why Interest On Gold Matters
  • 5 days Ten Extravagant Food Items For The Wealthy Only
  • 5 days Why Saudi Arabia Won't Give Up On The Aramco IPO
  • 6 days $32 Million Crypto Heist Halts Tokyo Exchange
  • 6 days Is A Gold Selloff Looming?
Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Ali  Chattoo

Ali Chattoo

What's In Stock? - http://www.whatsinstocktoday.com/

Originally a science student, I have studied sciences for the past few years. In my down-time however, I realized something was missing until I found…

Contact Author

  1. Home
  2. Markets
  3. Other

Has The Market Changed Itself?

It is common practice that on every fund sheet it’s written that “historical prices are not indicative of future returns”. The same way people use history before looking at a certain stock or fund - history and news event affect people's investing decisions. For example, when Donald Trump was elected and the Dow Futures fell over 800 points on election night - billionaire Carl Icahn left his victory party to buy stocks. What he did was an investment decision based on market tendencies after a significant news event.

Usually, what has happened in the past is whenever a negative news event took place- the market responded by opening in the red and usually presents itself with a buying opportunity. However, the next morning when the market opened - it opened in the green and while Icahn still made money those thinking they would buy in the morning had something else waiting for them...

So the question remains has the market essentially revamped itself and detuned itself to the news?

If we take a look at recent events with what is happening with Harvey, the situation in North Korea, the solar eclipse causing multiple power outages - business has been usual with the market rolling ahead and barely reacting to many of the situations. Even last year during Brexit - the market did get hit but picked up within the following week.

There’s a a good reason behind this:

I think the market has gotten used to the fact that so many things are happening nowadays. Just like society has an information overload we also have an overload of events. Every week it seems something new is going on and the market just doesn't react the same anymore. In a way the market has essentially gotten desensitized to anything that happens outside the confines of wall & bay street.

What does this mean going forward?

Well for starters it looks like big events will no longer cause the market to drop - but then again the market operates in mysterious ways. For the time being we know that most dips in stock prices reflect buying opportunities for a value investor to swoop in - essentially what happens now is a buying opportunity is removed.

A nice line came from Larry Swerdoe at MoneyWatch who wrote “ the market will react - you shouldn’t” which is great because it just re-enforces the idea you should not get into the habit of timing the markets.

By Ali Chattoo via What's In Stock?

Back to homepage

Leave a comment

Leave a comment