"Financial Management" Confused Stock Market

"Financial Management" Confused Stock Market (Alberta Times) The stock market crash in early August was more a buyer's strike than panic selling by investors. When...

"Financial Management" Confused Stock Market (Alberta Times) The sharp drop in the stock market in early August was not so much panic selling by investors, but more accurately a buyer's strike. When there are only sellers in the market, prices can of course plummet in a short period of time. Wall Street hates and is afraid of uncertainty. When this happens, no one is willing to take over the stock. Those who hold the stock may think that they should sell it first. Now the stock market is like a small boat sailing in the vast clouds and mist. I don't know where it is going, when there will be a big wave, and I don't know when we will see a clear sky. Why should investors own stocks at this time? The stock market crashes of this century have had their own characteristics, and all have been unprecedented. The first time was the bursting of the Internet technology bubble. Coupled with 9/11, the situation became more complicated and frightening. The second bubble came from the real estate market and caused a subprime mortgage crisis that everyone around the world had never heard of. The U.S. government is now on the verge of defaulting on its national debt, and its credit rating has been downgraded for the first time in history. The 1917 "debt ceiling" law is nonsense. Isn't the annual government expenditure already controlled by Congress? It is necessary to pass caps from time to time, which is not only unnecessary but also asking for trouble. Problems will arise when Congress is incompetent and ineffective. Whether Congress should pass a debt ceiling is equivalent to asking whether the United States should repay its debt. Of course! The debt ceiling has been passed 74 times in the past 50 years. If Obama had quietly tied the debt limit to the Bush bill to cut taxes and extend unemployment benefits in mid-December when the Democrats were still in the majority in the House of Representatives, there might not have been this crisis today. Maybe that wouldn't trigger Stamper's demotion. It seems unnecessary to have a rating for U.S. sovereign debt. Three, two, or one A's seem unimportant now. 14 trillion in federal debt is spread all over the world, and 9.5 trillion can be traded at any time. There is no such "large" and "circulating" transaction in the world. Therefore, although the credit quality of the US debt is poor, everyone is temporarily nervous and rushes funds into federal debt. Media reports and street talk have turned the downgrade of the U.S. debt rating into a crisis of confidence, and everyone is selling stocks to scare themselves. In fact, the root cause of the stock crash is the economy. Our economy only grew 0.8% in the first half of the year, and the full-year growth will be lower than expected in the past. Investors are not sure whether the economy will remain tepid or fall into recession again, and the stock market of course cannot find its direction and is confused. On August 9, the Federal Reserve announced that it would keep interest rates at a particularly low level until mid-2013. Historically, the Federal Reserve has never and cannot tell you its attitude towards interest rates within a certain period of time. This shows how severe the economy is. The Federal Reserve has told you that the economy will not heat up in the past two years, so what should you expect from the stock market. Since the economy is so bad and there are no three quantitative easing policies, of course everyone is not satisfied. However, the low interest rate environment will be beneficial to the economy. Suddenly, investors put aside the fear of the national debt downgrade and thought that the crisis was over and the economy would just wait and see. The Dow Jones retreated 600 points from the bottom during the day. Numerous problems and concerns have caused the stock market to find no direction since May. The S&P 500 index was locked in the box pattern of 1250 and 1350. On August 4, it finally broke below 1250 and continued to collapse for several days. At this time, a technical collapse appeared, and the stock market turned from a positive trend to a diagonal trend, because not only the support point of 1250 was broken, but also the 200-day moving average that must be defended fell. At the same time, in the several waves that have been rising for more than two years, the low point caused by the Japanese earthquake in March was 1256. This is not guaranteed. According to the Dow Jones theory, the main trend of the stock market has changed from "upward" to "downward" after August 2. According to that theory, the stock market has entered a bear market. If the S&P index does not return to 1250 as quickly as it fell, the stock market may have anticipated the recession ahead. The market will still see sudden ups and downs in the short term. The stock market will still be unstable in the first three or two months. The best situation is to slowly form a trading gap and be locked in it. What we are worried about is not the rise and fall of a thousand points in a few days, nor the short-term crisis, but the long-term economic loss. It is possible that the economy will lack momentum for many years, with continued high unemployment, low interest rates, a weak dollar, and depressed stock and housing markets. If consumers don't consume or invest, the economy will be dead. Those who saved received almost no interest and were punished for no reason. The lost 20 years seem to be the final path for all economically powerful countries. The stock market is also confused for the time being, and I wonder if we will follow this path. (The author is an investment consultant)