The Big Con!
If you remember on Friday when we were deluged by reports of analysts for major houses warning that:
this was the end of the world,
the sky was falling
this was the “big one” ,
the market would fall forever,
bigger than the Great Recession,
sell stocks, ALL stocks,
buy gold
etc
Let me propose a possible explanation of what was going on:
It was just business as usual! The major houses that these analysts were writing for had shorted the market indexes and were looking for a big payday. They were trying to scare everyone into selling stocks. It was just an attempt to make money at our expense.
I posted the following on Friday morning:
“Brexit - a 3-day wonder for markets. Sure the markets will be down for a day, because they think they are supposed to be. But in three weeks, who will care? Everyone will be thinking earnings season. Nothing will actually happen (with Brexit) for two years until they work out the details. And besides: Will LGIH sell fewer houses in Texas (to renters who want to upgrade to home ownership), because Britain leaves the EU?..”
It turned out that reasonable analysts like the ones at Zacks (like Mitch Zacks), and at Motley Fool, and others who weren’t shorting the market, agreed with me. They pointed out, as I did, that by 2018 or 2019 when Britain would be leaving the EU, all the transition would likely be worked out.
Well the big crash lasted two days, not three. My portfolio is now UP 2.5% from Friday’s close, and UP 7.2% from Monday’s close.
The world didn’t come to an end! That doesn’t mean we won’t have market swings coming up, but the world didn’t come to an end, and it won’t. I hope you didn’t get taken in by the big con, that you didn’t get scared into selling all your stocks and going into cash, and that you will remember this “crash”, and the Feb 11th crash, which also didn’t happen, the next time all the “sell all stocks” guys come around.
Saul
For Knowledgebase for this board,
please go to Post #17774, 17775 and 17776.
We had to post it in three parts this time.
A link to the Knowledgebase is also at the top of the Announcements column
on the right side of every page on this board