I guess, I don't understand why the market crash always seems like this gif for the last 2 years.

  • Foolio [any]
    ·
    edit-2
    3 years ago

    What data are you talking about? The signs a crash is coming? There an art to it, but generally interest rates going up is bad for stocks because it increases the "discount rate" on a company's earnings. If I can get a safe government bond at say 3%, then the theoretical growth/profits of your company are worth less to me than if the government only pays 1%. It also makes it harder for companies to borrow money (interest rate = "the price of money") which makes it harder for them to expand and grow earnings.

    One thing you have to remember is that investing news is a huge business, and news business always needs a story. Part of the reason why the market is "always gonna crash" is because somebody's gotta say something, and doom-pilling attracts viewers and clicks.

    The other thing is just the business cycle. Market cycles happen a lot faster than people think, like 2-4 years oftentimes, it's just that a "market cycle" doesn't mean the whole world will end or even a huge recession (recessions are not inherently super bad times like 2008 either, that was considered historically quite bad).

    Related to the above, everyone wants the credit for calling the "big one". The thing is, if everyone "knows" the market is gonna crash 90% like the Great Depression, a crash almost cannot happen because people's behavior is different. Big cascades down usually come from liquidations and margin calls, and people don't fuck with margin when they all "know" a crash "is coming".