Hello Investors, I hope this question will be continuously banging your head that why markets are not behaving as per your thought process and going the other way around.
Markets have a habit of remaining uncertain in short span of time. This is because of many reasons.
- Markets are always forward looking and due to which they anticipate thing earlier than heard in news.
- Day Traders react to each and every news which makes markets volatile in short span of time.
- When there is optimism among Investors, they tend to ignore all negative information.
- When there is pessimism among Investors, they tend to ignore all positive information. (Infact, too much -ve information is good for markets)
Let me ask you few questions which can help you understand my thought process.
- Were you bearish on markets when Covid-19 just started to emerge (late Dec 19) from china?
- When markets fell 12k to 11k in just 2-3 days did you noticed any increase in death rates across the globe (not only china)?
The point which I want to quote here is that, Markets already factored in all the news (Bad information) in advance, before even general public were able to realize the consequences of Covid-19. Therefore when the real situation is arriving to us (exponential increase in cases), markets are looking some positive development in global economy.
Positive Developments seen in Economy
- Graph of rise in cases is flattening out, which means worst might be over.
- Economies are doing their best efforts to protect the virus from spreading (help of complete lock down).
Does this mean market will go up?
This is the same question that gets repeated again and again among the investor community.
What is the best time to invest?
In fact, the best to invest is when you have money which you don’t need for the next 5-8 years. The market will remain uncertain and reflect greed and fear among the investor community.
The amount of optimism or pessimism is very difficult to calculate on the quantitative scale.
My opinion would be don’t wait for the right time to arrive as a good opportunity never carry tag along with them. My stance is that markets will remain range-bound for some period of time and still, investors will get plenty of time to invest in their favorite stocks.
I gave same answer around 7 months ago on Quora when market were at all time high and economy was performing poorly.
Read my full answer here.
I hope this small article added some value to you.
Thanks for reading.
