Finally!  The slap everyone was waiting for on the stock market - Finance

Finally! The slap everyone was waiting for on the stock market – Finance

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There was a time when in our lands, the good people cried out the “King is dead, long live the King”. Today, it would rather be the “Stock Exchange is falling, long live the Stock Exchange”. Surprising, paradoxical, this new rallying cry? In appearance only.

It is true that the stock market is not in great shape, to put it mildly. The stock market has not stopped falling since the beginning of the year. The Nasdaq to give just one example lost 26%. Of course, it’s never funny when you yourself are concerned. But if you talk to seasoned investors, they will all tell you the same thing: it’s a nice slap, but it’s a healthy slap!

Not because these veterans of the Stock Exchange are masos or that they rejoice in the misfortune of others, but more simply, because the Stock Exchange has been living in euphoria for several years. In fact, since central banks have turned the liquidity tap wide open and kept interest rates artificially close to zero percent.

Today, central banks are gradually closing the liquidity tap. Pattern ? They must fight inflation as a priority, at the risk of derailing fragile growth. And to fight against inflation, you have to go through the box of rising interest rates.

However, it is well known that the rise in interest rates is generally not good for the market of companies listed on the stock exchange and in particular those which are too indebted. As a result, the current stock market purge is a salutary slap, because previously most listed companies were overvalued, particularly in the technology sector.

One example among many others? In 2020, the electric truck manufacturer Nikola Motor, which presented itself as the Tesla of trucks, was valued by the Stock Exchange at 30 billion dollars a few days after its IPO. Not bad is not it ? Yes, except that at the time, this company had not yet manufactured a single truck!

In other words, we are emerging from a period when interest rates were so low and central banks intervened all the time to avoid a stock market crash, that investors believed that trees could climb to the sky.

Today, with the current stock market purge, investors – the real ones – are happy to see that their role will finally be recognized. The Stock Exchange will finally make the difference between the values: the good and the less good.

In other words, the tide will not rise for everyone as it did in the old world. As for financial analysts, they will finally be able to exercise their profession, which consists of separating the wheat from the chaff. So, yes, it’s true, behind the bad news of the stock market slap, there is good news: the return of rationality to the stock market.

In the old world, as one stock market commentator put it, “water no longer wet and fire no longer burned”. As for cryptocurrencies, they drink the cup so much that some trading sites in the United States give the addresses of suicide prevention centers.

The opportunity for yours truly to recall that if the human being will always remain motivated by the lure of gain, the latter must keep in mind that when it comes to investing in cryptocurrencies, you should only put in it what the we are ready to lose. In short, avoid leverage effects. As for those who will tell me that we have to look at all this in the long term, I will answer with the words of Woody Allen: in the long term, the only two things of certain are death and…taxes!

It is true that the stock market is not in great shape, to put it mildly. The stock market has not stopped falling since the beginning of the year. The Nasdaq to give just one example lost 26%. Of course, it’s never funny when you yourself are concerned. But if you talk to seasoned investors, they will all tell you the same thing: it’s a nice slap, but it’s a healthy slap! Not because these veterans of the Stock Exchange are masos or that they rejoice in the misfortune of others, but more simply, because the Stock Exchange has been living in euphoria for several years. In fact, since central banks have turned the liquidity tap wide open and kept interest rates artificially close to zero percent. Today, central banks are gradually closing the liquidity tap. Pattern ? They must fight inflation as a priority, at the risk of derailing fragile growth. And to fight against inflation, you have to go through the box of rising interest rates. However, it is well known that the rise in interest rates is generally not good for the market of companies listed on the stock exchange and in particular those which are too indebted. As a result, the current stock market purge is a welcome slap, because previously most listed companies were overvalued, particularly in the technology sector. One example among many others? In 2020, the electric truck manufacturer Nikola Motor, which presented itself as the Tesla of trucks, was valued by the Stock Exchange at 30 billion dollars a few days after its IPO. Not bad is not it ? Yes, except that at the time, this company had not yet manufactured a single truck! In other words, we are coming out of a period when interest rates were so low and central banks intervened all the time to avoid a stock market crash, that investors thought trees could climb to the sky. Today, with the current stock market purge, investors – the real ones – are happy to see that their role will finally be recognized. The Stock Exchange will finally make the difference between the values: the good and the less good. In other words, the tide will not rise for everyone as it did in the old world. As for financial analysts, they will finally be able to exercise their profession, which consists of separating the wheat from the chaff. So, yes, it’s true, behind the bad news of the stock market slap, there is good news: the return of rationality on the stock market. In the old world, as one stock market commentator put it, “water no longer wet and fire no longer burned”. As for cryptocurrencies, they drink the cup so much that some trading sites in the United States give the addresses of suicide prevention centers. The opportunity for yours truly to recall that if the human being will always remain motivated by the lure of gain, the latter must keep in mind that when it comes to investing in cryptocurrencies, you should only put in it what the we are ready to lose. In short, avoid leverage effects. As for those or those who will tell me that it is necessary to look at all this in the long term, I will answer with the sentence of Woody Allen: in the long term, the only two things of some people are death and… taxes!

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