3 ms·
Frankly there's not much gleaned from stock prices over a short term. The market can be very reactive to events, but then quickly recover once the "new normal"
by bruce511 2y ago
Frankly there's not much gleaned from stock prices over a short term. The market can be very reactive to events, but then quickly recover once the "new normal" is established.
There are certainly indications that the economy will contract (but by low single digits at worst.) 30% swings in stocks represent either highly inflated valuations before, or radically different outlooks after. That may be true for a stock here or there, but not the market as a whole.
The US bond market is a more interesting signal. That will affect future-debt cost, and that significantly moves the needle.
- ArtTimeInvestor 2y agoFrankly there's not much gleaned from stock prices over a short term It's easy to disprove that. If it were to hold true, a "buy if the price is below the 100-day-mean, sell if above" would be profitable. And that approach would be exploited to the extent that this pattern goes away.
- bruce511 2y agoYou're talking about an individual stock price. I'm talking about the market. Put another way, your strategy completely works because stocks (as a market) trend upward. You'd want to better define "above" and "below" (because, transaction costs) and you'd also want to consider the period (100 days).