If you want to see how the chase is felt, you do not have to stop in a car crash or fall down the stairs. Instead, you can watch the stock market.
Let me explain. During five weeks from August 29 to October 3, four major market indicators – the Standard & Poor's 500 stock index, the Dow Industry, Nasdaq Composite and Wilshire 5000 – all hit their peak of all time. The gods on the market plunged money on investors.
Of course, interest rates have risen and there are signs of other problems. But optimism reigned. Stocks went up and continued to climb.
They were not suddenly. Soon after Dow reached its peak on October 3, inventories began to fall and continued to fall for weeks.
The main reason for the rejection was. ,, rising interest rates. Prices have risen during the ride – but it does not matter. Suddenly, rising rates – particularly rising long-term rates – were seen as a big problem.
Donald Trump, who made his October run of mouth, blaming the increase in short-term Federal Reserve due to the fall of the market, did not help them. (I'll keep an explanation of why raising FED short-term credits is likely to help the stock market by putting pressure on rates at long rates. For details, contact the local guru on the market.)
At a time when the markets were closed for Halloween, the frightening decline in October removed the stock of gains for a year. Many investors felt obsessed, so to speak. Fear reigned.
The "correction" talk was everywhere. For those of you who are not talking about stock markets, "correction" (later on) is a drop of 10 percent or more than the market top. This is quite a random measure, based on nothing scientific or financial.
Now, look. According to the data gathered by Wilshire Associates, all major market indicators are affected by "corrections" in October. Downturn down from 10.1 percent for Dow to 14.6 percent for Nasdaq.
I do not know about you, but as an English language that is also grammar, the way the "correction" is used – or, better, misused – irritates me. It's as if they hear nails scratched on the board. (If the plates still exist.)
"Correction," you see, is nothing more than the euphemism for a "substantial drop in prices". Market news in the late October of October often included the mention of different markets that were on or off the "correction" area on a given day or at a certain point – as if they were important for themselves and for themselves.
Here's why I'm so skeptical about the concept. After a "correction" has occurred, stock prices are probably accurate, right? So, answer this: If at a certain point Nasdaq composite, say, 14 percent lower than its high and "corrective" fashion, does that mean that its current level is correct? If so, was a mistake at Nasdaq's earlier higher price? Of course, these are rhetorical questions – but they are good.
"I personally do not believe in these artificial corrections," but there are many markets, "said Wilshire Managing Director Bob Waidsays." So part of that can be a self-fulfilling prophecy. "
Let's see what happened this month so far. Shares have been rising since the beginning of November. Suddenly, the "correction" of speech has disappeared. We are now looking at "repair" after correction. What is not called an "error".
From Wednesday's market, four market indicators have risen between 3 and 4.3 percent. Total turnaround in October.
You've seen the stories, of course, attributing a strong rise in the market Wednesday, which is a significant part of the increase in November, to the results of mid-term election choices.
But that does not make any sense to me, given that the results – the Democrats who took control of the House, the Republicans who slightly expanded their border to the Senate – were quite a lot of what was anticipated.
However, in a world where people – especially people in and around our nation's capital – have been obsessed with more than half the months, it is natural to attribute all election results. Removing Old Marks Mark Twain: If someone with a hammer, everything looks like a nail.
How can I explain why the markets are so brutal? I mean – but can not prove – that much has to do with the fact that most stock transactions these days does not consist of people trading with each other, but with computers using stock trading algorithms forwards and backwards to ultrahigh speed.
As a result, when the shares rise, they tend to continue. And when they go down, they tend to go down.
For whatever I know, by the time you see it, the market that is sharp-then-down-sharp-then-up-sharp-seen again over the past 10 weeks may be down again. Or go to the damping speed. Whiplash City, here we come.