My Thoughts About the Stock Market — May 2020
I think it is really hard to say anything about the financial markets these days. Luckily, my long-term strategy involves not caring about what is happening short-term. But at the same time, the economy and the financial markets are something that fascinates me. So it is really hard not to think about it.
Experts are saying this and experts are saying that. The voices I am listening to seems to agree that the markets now are over-valued. Looking at the S&P 500 we see that it has recovered a lot since the bottom in March. But it is still down for the year. This is not surprising, the question is, should it have recovered that fast? And are we in for a new decline?
Why is it So Hard to Predict?
One of the reasons it is so hard to predict whether the market will fall again or it will keep climbing is that the market now is irrational. The market is pumped with government buy-backs and quantitive easing. This stimulates the market and people start fearing missing out. At some point the market manipulation will end and we will also see the businesses reporting their results. At that point, we will truly see the state of the market.
But, when will this happen? That is the million-dollar question. And if you are able to predict that and the outcome you will be set for life. The…
