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General Investing and Economics Discussion - No Politics
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<blockquote data-quote="Techster" data-source="post: 704875" data-attributes="member: 360"><p>Agree 100%.</p><p></p><p>Markets have not moved with "valuation reality" for a while now. Covid 19 virus just gave jittery investors a reason to bail. Also, something that few have touched upon...algorithm controlled trades at large funds that have built in "black swan" events such as the virus. Make no mistake, once certain algorithmic "wires" were tripped with respect to the virus, it executed multiple huge trades across markets causing values to tumble. Then you had everyone else piling on. Sentiment is a very powerful part of trading. </p><p></p><p>Stocks are like any other commodity. They're only worth what someone else is willing to pay for them. Look at Tesla. If you looked strictly at Tesla's books versus any other car maker, you'd laugh so hard if they told you what someone paid for one share. Of course, if you invested in the Tesla in the last 2 years, it would be a laughter of joy. Tesla is the ultimate sentiment trade.</p><p></p><p>It will be interesting to see how the US markets react when the country's Covid 19 curve starts to "flatten" and even more interesting once it the line starts going down. Personally, I believe the market will recoup a LOT of its value. Maybe not pre-Coronvirus levels, but a 50%+ recovery would not surprise me at all.</p></blockquote><p></p>
[QUOTE="Techster, post: 704875, member: 360"] Agree 100%. Markets have not moved with "valuation reality" for a while now. Covid 19 virus just gave jittery investors a reason to bail. Also, something that few have touched upon...algorithm controlled trades at large funds that have built in "black swan" events such as the virus. Make no mistake, once certain algorithmic "wires" were tripped with respect to the virus, it executed multiple huge trades across markets causing values to tumble. Then you had everyone else piling on. Sentiment is a very powerful part of trading. Stocks are like any other commodity. They're only worth what someone else is willing to pay for them. Look at Tesla. If you looked strictly at Tesla's books versus any other car maker, you'd laugh so hard if they told you what someone paid for one share. Of course, if you invested in the Tesla in the last 2 years, it would be a laughter of joy. Tesla is the ultimate sentiment trade. It will be interesting to see how the US markets react when the country's Covid 19 curve starts to "flatten" and even more interesting once it the line starts going down. Personally, I believe the market will recoup a LOT of its value. Maybe not pre-Coronvirus levels, but a 50%+ recovery would not surprise me at all. [/QUOTE]
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