(Drivebycuriosity) - This week the US stock market had another hiccup. Dow Jones, S&P 500 & Nasdaq lost between 2 and 4%. The dip is not surprising. US stocks - represented by the S&P 500 - had gained about 12% in the recent 12 months, technology stocks much more. Some superstar stocks like Amazon had climbed more than 100%. So some gamblers took some money from the table.
Professional portfolio managers, including administrators of large funds, usually act as a herd. When their bros are selling they are selling too which amplifies the stock market movements. The slide in the middle of the week animated many fund managers - and others - to take profits,
apparently this encouraged hedge funds and other short sellers to
amplify their bets against the stock market. So the slide accelerated,
causing more selling - a typical herd behavior. Falling stock prices
also triggered stop-loss-orders. Many professionals set these sell
orders to prevent further loses.
I bet that investors like Warren Buffet did not participate. Investor have a different mind set and a long term horizon. They don´t follow the herd and stick with their investments to give them time to play out.
This week`s turbulence reminds me of similar hiccups in February & March when the gamblers responded to news about interest rates & trade war as they did this week again (madness ). I assume that this week´s dip will soon be forgotten - like the dips from February & March - and the gamblers will come back thanks to the solid growth of the US economy (about 4% annually frbatlanta ) and swiftly risings company earnings (around 20% annually zacks).
Enjoy!
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