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BootinUp

(48,897 posts)
Wed Aug 7, 2024, 01:56 PM Aug 2024

The Mini Stock Market Crash and Why it Matters





They’re unpredictable, volatile and prone to sharp emotional swings. They have short attention spans and find change difficult because they are frequently scared of new things or overly enthusiastic about them. They’re impulsive, demand attention and throw tantrums when they don’t get what they want.

I’m not describing toddlers but traders.

This week’s financial market meltdown had a lot in common with a toddler tantrum. The catalyst was Friday’s moderately disappointing jobs report, combined with the Federal Reserve Board’s failure to cut rates in anticipation of those disappointing numbers. Yes, markets can often signal a faltering economy, but there are better signs elsewhere. A nuanced reading would note that the Fed signaled a willingness to cut rates, that July’s employment numbers may have been distorted by Hurricane Beryl and that the rise in unemployment reflected a spike in temporary layoffs.

But toddlers see best in simple terms. So too do traders, who spat out their pacifiers and revolted, driving stock prices down by 3 percent on Monday. They also drove long-term interest rates down sharply in anticipation of Fed rate cuts. The VIX — a measure of how fearful the market is of future market gyrations — rose on Monday to worrying levels.


A good tantrum doesn’t just annoy parents, it also draws the attention of onlookers. Some drew parallels with the 1987 stock market crash, and others described the Fed as “behind the curve.” Jealous siblings tend to add fuel to tantrums, and indeed, former President Donald Trump posted on Truth Social that “stock markets are crashing” and “jobs numbers are terrible.” The Republican National Committee tried to make #KamalaCrash trend. (Just so you know, even July’s anemic employment growth was higher than the average through the Trump presidency, which was hit by big losses at the start of the pandemic. Also under President Trump’s watch, the S&P 500 experienced larger daily declines 21 times.)


https://www.nytimes.com/2024/08/07/opinion/why-financial-markets-are-like-toddlers.html?unlocked_article_code=1.BE4.cJUF.oN1vBco0g49p&smid=nytcore-ios-share&referringSource=articleShare
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The Mini Stock Market Crash and Why it Matters (Original Post) BootinUp Aug 2024 OP
Bullshit. Think. Again. Aug 2024 #1
Please read the article before commenting BootinUp Aug 2024 #2
Nah, none of the "mini stock market crashes" matter at all. Think. Again. Aug 2024 #3
Less coffee perhaps. Nt BootinUp Aug 2024 #4
I don't own any stock in coffee companies. Think. Again. Aug 2024 #5
Article is by Justin Wolfers. That's why I BootinUp Aug 2024 #6
So the "invisible hand" orthoclad Aug 2024 #7
This message was self-deleted by its author BootinUp Aug 2024 #8
OMG Navidia market cap is now only 2.43 trillion...the world is comng to an end! NowsTheTime Aug 2024 #9

Think. Again.

(17,324 posts)
1. Bullshit.
Wed Aug 7, 2024, 02:00 PM
Aug 2024

The stock market goes up and down, and between programmed trading, short selling, daytrading, and retail online trading, it's much more of a computer game than an indication of how American businesses are doing.

orthoclad

(4,728 posts)
7. So the "invisible hand"
Wed Aug 7, 2024, 02:44 PM
Aug 2024

is a psychopath?

Economics is a religion, at least capitalist economics. It's built on faith. When people lose faith, it crashes, in a faith-and-crash spiral. It's also prone to manipulation by priests rich people,


It has less to do with due diligence and analysis than with emotion.

Would bishops rich people manipulate the market for gain? These little interludes where prices fall are great buying opportunities for those with cash reserves.

Response to orthoclad (Reply #7)

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