Misjudging Possibility

When short-term minded people assume long-term intended goals sentiment plays a far more explicit role than reality. During my research I pass through many articles. As an analyst by nature it always strikes me as interesting when a particular sentiment seems to find a widespread interest.

The sentiment I refer to is that of “Don’t worry, the market won’t come crashing down any time soon”. From where do they assume this sense of security? Does history always give us warning ample enough to be reflected in the awareness of its spectators?

It seems that the disconnect in the marketplace today is one based not on confirmed truths but rather on an exrapolation faulted by its orgin from preconceived notions. With the analysis of present the abhorent stream of ridiculous circular referance will take its toll on those that, with the fine art of promoting the lagging indicators and disregard the leading ones,ignorantly downplay the realm of possibility to their own demise.

Two examples I came across recently…

From Brett Steenbarger, “It is difficult to believe that as long as the weak dollar and even weaker Yen provide liquidity to the markets that we’ll see a meaningful market downturn.” He seems to have a logical base demonstrating the correlation between a falling Yen, hence a widening carry trade, and higher equity prices. But again the dynamic of provincial thinking is well at hand. I feel like saying “Eat today my sons for tomorrow there shall be no food”.

Marketwatch reports study “Owners of million-dollar homes expect values to keep growing.” It was quite swift to rightfully name the article Luxury Optimists. Here it’s “Eat bountiful today for tomorrow there most certainly will be in abundance”.

Interest Rates are rising, along with inflation. corporate profits and its derivative Equity Prices rise as well. But so does Consumer Spending and Accumulated Debt. It is a matter of certainty that this spread will give way and bring along a correction for he involved yet oblivious.



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