Rules tell to dance to the music until it stops. Well, over the past few days somebody must have thought that the end of the expansion tune was pretty close. Market stampede precipitated the S&P500 down 200 points (~7%) in 8 trading days, volatility spiked again, and growth stock investors had this reality check moment. We can all look back and blame it on rising rates, trade war and even blame hurricane Michael, and affirm in certitude that things are not that bad in the end…until another shoe drops.
In markets, short-term good is long-term bad and vice versa, and everything is a game of anticipation. Over these past 8 days, investors looked past mid-term elections, past 3Q18 expectedly good corporate earnings, and gazed hard at implications of higher rates on consumption, of the pivot from the US away from the old economic order, or rising inequalities – why not, this may matter after all. And suddenly they came to the conclusion that it might be worth a 7% adjustment, or maybe 20%, or maybe 50%. Oh, forget about that, let’s dance !
360 Advisory – Markets