Article from Charles Schwab: Panic Is Not a Strategy—Nor Is Greed
. . . "If markets are good at one thing, it's reminding investors that they don't go up uninterrupted forever. The US stock market went over 1,000 trading days between its 2011 correction and the one we’re in the midst of presently. Normally, corrections—defined as declines of at least 10%—occur about once a year. As the chart below illustrates, the CBOE Volatility Index® (VIX) has spiked. Last week’s move was the largest for a single week in the history of the VIX, albeit nowhere near the peaks between 2009 and 2011." . . .
How Would Market Chaos Affect The 2016 Race? . . . "This sharp decline in stock prices is in no way comparable to the meltdown of 2008, which threatened the global financial system with ruin. Venerable investment houses are not failing. Big banks are not clamoring for emergency infusions of cash. There is no subprime bubble to burst.
"But the current market losses, which began in China, are not happening in a vacuum. China's growth rate, which for years was about 10 percent a year, is down to a relatively anemic 7 percent, according to official figures -- and the true growth figure is probably much lower, according to independent economists. A slowdown of this magnitude in the world's second-biggest economy inevitably ripples across the rest of the globe." . . .Liz Ann Sonders
The Fed Rolled a Wheelbarrow of Dynamite into a Crowd of Fire Jugglers " . . . John Hussman be abused by the elitist Wall Street lemmings. He has too much integrity and class to lower himself to the level of Wall Street hucksters. His letter this week is heavy on substance, facts, and sound reasoning. Therefore, it is of no use to CNBC cheerleaders or Wall Street shysters. His lessons are timeless.
. . . "If markets are good at one thing, it's reminding investors that they don't go up uninterrupted forever. The US stock market went over 1,000 trading days between its 2011 correction and the one we’re in the midst of presently. Normally, corrections—defined as declines of at least 10%—occur about once a year. As the chart below illustrates, the CBOE Volatility Index® (VIX) has spiked. Last week’s move was the largest for a single week in the history of the VIX, albeit nowhere near the peaks between 2009 and 2011." . . .
How Would Market Chaos Affect The 2016 Race? . . . "This sharp decline in stock prices is in no way comparable to the meltdown of 2008, which threatened the global financial system with ruin. Venerable investment houses are not failing. Big banks are not clamoring for emergency infusions of cash. There is no subprime bubble to burst.
"But the current market losses, which began in China, are not happening in a vacuum. China's growth rate, which for years was about 10 percent a year, is down to a relatively anemic 7 percent, according to official figures -- and the true growth figure is probably much lower, according to independent economists. A slowdown of this magnitude in the world's second-biggest economy inevitably ripples across the rest of the globe." . . .Liz Ann Sonders
The Fed Rolled a Wheelbarrow of Dynamite into a Crowd of Fire Jugglers " . . . John Hussman be abused by the elitist Wall Street lemmings. He has too much integrity and class to lower himself to the level of Wall Street hucksters. His letter this week is heavy on substance, facts, and sound reasoning. Therefore, it is of no use to CNBC cheerleaders or Wall Street shysters. His lessons are timeless.
Rather, the key lesson to draw from recent market cycles, and those across a century of history, is this:
Valuations are the main driver of long-term returns, but the main driver of market returns over shorter horizons is the attitude of investors toward risk, and the most reliable way to measure this is through the uniformity or divergence of market internals. When market internals are uniformly favorable, overvaluation has little effect, and monetary easing can encourage further risk-seeking speculation. Conversely, when deterioration in market internals signals a shift toward risk-aversion among investors, monetary easing has little effect, and overvaluation can suddenly matter with a vengeance.
Stock market plunges, then regains half the loss in 30 minutes "The end of the world has been postponed. Following dramatic plunges in Asian and European markets, the Dow Jones futures index predicted over a 600 point loss by opening. And sure enough, panic selling pushed the Dow Jones Industrial Average down over a thousand points. But within thirty minutes, more than half the loss was recovered."
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