Wall Street Worries

The major stock markets have not, so far, enjoyed 2014.  Unless you sold short, this year has been a disappointment.  In fact, the big players have found themselves caught up with the herd and have followed the market averages down.  The Dow Jones has dropped over 1000 points in a little over three weeks.  While three weeks do not make a year, one still wonders whether the sky will fall next.

As usual the pundits’ explanations never deal with fundamentals, especially in a falling market.  Rather, experts are writing about “fear”.  The fear key investors are worrying about is reduced growth in the US and China.  Surprised?

You should be because there is no new information on 2014 growth for either country that was not known in December 2013 when the Market rose seemingly without limits.  Maybe this is just the “glass is half full or half empty” situation.  In December it seemed one way, now it seems the opposite.  Hmmm.

The Market has been often described as mostly a herd phenomena.  When one market maker gets a feeling or sees an opportunity, this player might buy or sell.  The rest wonder what that player knows.  In response, many of the other players “protect” their overall positions by doing the same.  Consequently when we look at market performance over time, we see a jagged line jerking up and then down, and then up again.  A logical and thoughtful study of market fundamentals when applied to buying and selling would be unlikely to yield this type of performance.

In December, when the world’s markets were rising most every day, the overall economy of Europe was anything but robust, China’s was struggling (and likely to decline further) even at a 7+% annual growth rate (down from over 10+% in the past), emerging economies were struggling, and the US was chugging along with 2% or so growth.  That is the same picture we see today.

You figure.


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