The Economy Is A Mess. So Why Isn’t The Stock Market?

[Olde Hornet]

The Economy Is A Mess. So Why Isn’t The Stock Market?

The Economy Is A Mess. So Why Isn’t The Stock Market?

Employment rates, oil prices, consumer confidence and many other measures paint a clear recessionary picture. And yet stock indices continue to rebound much faster than the rest of the economy.

fivethirtyeight.com

We’ve said it before: The stock market is not the economy.

Usually, this simply means that fluctuations in the markets may have little to no real bearing on the underlying realities we think of as making up the economy. Or that there are many important structural factors that make the markets’ outlook different from how ordinary citizens view the country’s overall economic health.

But now, those usual bromides risk wildly understating the disconnect. In the time of COVID-19, the stock market couldn’t be more divorced from the United States’ broader economic situation. Although the S&P 500 tumbled sharply in March, as the coronavirus shut down large swaths of the economy, it had made back almost all of its losses by the first week of June — before dipping again and then quickly rebounding yet again.

 

[Olde Hornet]

Those in the market, you might want to take some profits out before the elections.

Bulls Make Money, Bears Make Money, Pigs Get Slaughtered

Bulls and Bears Make Money, Pigs Get Slaughtered | The Motley Fool

"Bulls make money, bears make money, pigs get slaughtered" is an old Wall Street saying that warns investors against excessive greed, here's what you need to know.

www.fool.com

Bulls
A bull market is one marked with optimism and high investor confidence. During bull market periods, the economy is generally doing well, unemployment is on the decline, and stock prices are going up. Furthermore, the attitude associated with a bull market is that stock prices will continue to rise. In some regards, investing during a bull market is easy because the expectation is that stock prices will simply climb and remain high across the board. The problem, however, is that bull markets don't last forever, and they can often cause investors to lose money by holding overvalued stocks.

Bears
A bear market is one plagued with pessimism and low investor confidence. Bear market periods tend to coincide with looming economic recessions and are marked with falling stock prices. Investing during a bear market can be challenging because it's hard for investors to pinpoint which stocks will be profitable when prices are trending downward on a whole. In fact, some investors prefer to wait out a bear market and buy stocks only when they feel it's reaching its end.

Pigs
Pigs are investors whose goal is to make the most amount of money in the shortest amount of time. Piggish investors are known to either take on high degrees of risk or overlook risk in order to make a profit. They often make rash investment decisions and buy stocks without doing their proper due diligence. As a result, they tend to lose money, hence the adage that they inevitably get slaughtered. While bullish and bearish investors may have opposite investing styles, they each have the potential to make money if they manage to time the market correctly. Pigs, by contrast, are the most likely to lose money no matter the shape of the market because of their greedy attitude.