The stock market – So, what’s going to happening? Will the market bounce back or continue to tumble?
Whether it bounces or tumbles, it’s all going to depend on the facts and on feelings.
Markets are fact based. While there are a gazillion relevant facts to consider, the most important single fact in determining the long-term direction of the stock market is profit. How much profit is corporate America making - both now and in the future? And long-term corporate profits will be the single greatest determinant of long-term economic health for our country.
But if facts were the only factor, there wouldn’t be much fluctuation in the market. So, what makes markets seem to jump around so erratically?
Markets are also feelings based. Markets are not just about math. They are about people trying to do the math, and how they feel about that math at any given point in time. People tend to become more or less optimistic or pessimistic based on all kinds of factors, many of which are impossible to predict with any degree of accuracy.
Waiting until the market has come back to the place where you and everyone else feel good about things is a dicey proposition. It can work out okay, but things can easily go south again.
A far better strategy is to have a plan for what you’ll do whatever the facts are, or how you feel about them.