In situations where repetitive behaviors occur over long periods of time (I.e. the stock market) we can study the past to see if it gives us a basis for predicting the future.
In this particular time in the timeline, I have concluded that current market activities, (Volatility that is) is best explained by lack of visibility going foreword.
Some of the primary forces that are moving the markets are Monetary policy, Fiscal policy, recessionary fears, inflation fears, corporate guidance and geopolitical tensions just to name a few. These all become increasingly relevant as their probabilities of occurring rise…
So what can we expect from the markets ahead?
Well we can expect people to become more cautious given all the things that could go wrong. However there is a high chance that because excellent businesses have sold off tremendously, these little fires are priced in to a certain degree, no one can say with certainty but we can make educated guesses based on the information at hand. The markets are reacting to general trends, which in this case is bearish.
I thinks It is safe to say, that given the downward pressure, excellent businesses are somewhat mispriced and can be very attractive on a valuation premise. Some stocks have been hurt when their underlying business is strong and healthy. This gap within the spectrum can offer us investors and excellent buying price for excellent businesses.
No-one can predict with certainty where stocks will go, specially in volatile times like we are going through today… however, if history is any guide, we can safely say that with time on our side, this too shall pass.
This is not financial advice, I had to write this as a discussion for school and would like peoples opinion.
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