No. of Recommendations: 11
The near-term movement in the stock market yesterday, today, last week, last month--doesn't tell you anything about the real-world economy now-- or in the future.
Let's look at the only real TRUE CRASH of the last 90 years...36.1% in a very short time: 1987
We were told afterwards by the Goldmans of the world there was a certain deep recession at best coming--possible Great Depression 2, inflation had jumped, PEs were sky high, interest rates were rising, speculative fever off the charts...."the damage has been DONE. The retail investor is scared stiff and WILL NEVER COME BACK" I heard over and over...
What came about from these historic dire equity markets? Great times.
10 weeks later-- 1988 GDP: UP 4.18%, near full employment, modest inflation and --a booming stock market backed by higher corporate earnings. Even in 1987 the market was actually up slightly for the year.
Als consider the 1987 landscape: options activity was much lower than today (brokers didn't need to push it like today they made money on trades), leveraged ETFs did not exist, limited margin in IRAs which today allow almost unlimited free leverage/no tax consequence/ FREE trades today --did not exist , free trading ITSELF did not exist--it cost $29-$80 for a trade, and we had specialists on the floor.
And yet the market literally crashed. And it forecast exactly NOTHING in the real world.
You'll see lot of people as the market declines say-- see I told ya! Yeah, they didn't say much when markets rose 53% the 2-years preceding. Like we didn't notice. I call it the Grantham Phenomenon,
The bulls will chime in with "see--look at that rally yesterday. I told ya!". Short covering, dip buying, hope, or most likely a bet like Draftkings..the Chiefs cover the spread you're a genius...
Meaningless noise. Loud noise. But noise.
