4 ms·
I agree with most of this, but note that stock prices don't track real-world events as closely as you're suggesting. They're based on competing predictions of
by bluquark 4y ago
I agree with most of this, but note that stock prices don't track real-world events as closely as you're suggesting. They're based on competing predictions of the future. The market will (or has already) hit bottom when the average prediction starts being less pessimistic, not when inflation actually subsides or the Fed actually lowers rates.
The defining feature of bear markets is not direction, but high volatility -- they look like a random walk without a clear upper or lower bound.
- cloudking 4y agoYes predictions are a part of stock prices, but the price ultimately comes from supply and demand. If there are more people that want to buy the stock (demand), than people selling (supply) then the price goes up. In this environment where inflation is everywhere and it costs more to borrow money, demand has come down and will likely not return until the Fed switches their policy stance. At least for US markets.