Saturday, April 12, 2014

Stock Market: Guts And Brain

(Drivebycuriosity) - The stock market is again in a situation that needs guts and brain. The masses are selling like crazy. Once popular stocks like Facebook, Netflix, Tesla, Twitter, Biogen and 3D Systems are almost in a free fall now. The Nasdaq Composite Index, which comprises the most risky stocks, tanked 3,6% last week; even the broader S&P 500, the gauge for the US stock market, lost 2.6%.

The headlines in the media are gloomy. The usual alarmists predict a nascent stock market crash. This reminds me of the situation in the second half of 2011. Then stocks, especially the risky Nasdaq papers, also got battered. From mid July 2011 through mid August 2011 the Nasdaq papers plumed around 20% to 2,340 points, thanks to the panic selling by hedge funds and other speculators. Since then the index gained around 70%.

The precent panic is ridiculous again. The weekly job market claims fell on a seven-years low, other indicators like the purchasing manager indices for manufacturing & services, industrial production and retail sales also show that the US economy is in a solid upwards trend and Europe`s economy is recovering.

Especially the selling-off of technology stocks doesn`t make sense. We are experiencing a new industrial revolution: Rapid advances in 3D-printing, robotics, nano-technology, bioengineering (new medicaments) and more industries are working together and are reducing costs, opening new markets and making our lives better. And: The number of Internet users - and hours & money spend online - is worldwide exploding thanks to cheap smartphones and other devices which give access to the worldwide net.

I reckon that the bull market, that started in spring 2009, will continue and believe that the recent losses on the stock market will soon be forgotten like the ridiculous turbulences from 2011.

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