Market As A Barometer For Worry? (1 Viewer)

[Joe Bryant]

I have a very close friend who works very closely with the US stock market and Wall street.

He despises Trump. And is super vocal about it. 

He told me today he was dismayed by what he sees as an over reaction from the left or anti Trump on the Iran situation. 

This didn't fit with what I thought he'd think as someone who despises Trump. 

I asked him, "your'e not worried about this Iran thing?" He said he's not worried at all. He said the market is his barometer of worry. When the market is unfazed, he's not worried.

And make sure to understand: This isn't about "everything is good as long as the 401k, yo". He's saying the financial markets are a huge indicator of how worried one should be about things.

What do you think of that?

 

[IC FBGCav]

The market isn't free, its influenced highly.  We have pumped over 500 billion in it recently to cover short term loans.  Don't see the correlation.

 

[timschochet]

I don't know.

I don't understand what makes the market go up or down. And when I listen to people who claim they do I don't understand that either.

But to answer your friend: I don't think the left has overreacted about Iran. I think they're justifiably concerned. I know I am. 

 

[IC FBGCav]

More injected by fed today.

https://www.wsj.com/articles/demand-for-fed-liquidity-rises-new-york-fed-injects-nearly-100-billion-11578409629

 

[Joe Bryant]

I don't know.

I don't understand what makes the market go up or down. And when I listen to people who claim they do I don't understand that either.

But to answer your friend: I don't think the left has overreacted about Iran. I think they're justifiably concerned. I know I am. 

Thanks Tim. I get it that you are concerned. I know many are.

What my buddy (who hates Trump) is saying is that you are massively over reacting. And I always look to context on things. This is a guy who LOVES to find things to rip Trump over. He's one of the last guys I know who'd minimize something bad from Trump. That's why his take surprised me. 

And that's what I'm trying to get my mind around. 

 

[timschochet]

Thanks Tim. I get it that you are concerned. I know many are.

What my buddy (who hates Trump) is saying is that you are massively over reacting. And I always look to context on things. This is a guy who LOVES to find things to rip Trump over. He's one of the last guys I know who'd minimize something bad from Trump. That's why his take surprised me. 

And that's what I'm trying to get my mind around. 

I don't really want to rip Trump on this one. I was ready to support him as of Friday night when I thought it was an imminent attack. I'm hoping they're not lying about that but they've been vague ever since. And they haven't discussed what our long term goals over there are (although, to be fair, neither did Bush or Obama.) But Trump's general dishonesty and his lack of competence (IMO) bother me. Hoping for the best.

 

[timschochet]

Also as far as not worrying- per Max in the other thread, we are being attacked right NOW.

 

[The Commish]

What do you think of that?

I think his priorities in life are calibrated very differently from mine and I think his measuring stick for "things important" is also very different from mine.

 

[jonessed]

Iran was planning on attacking us.  Now they are really, really planning on attacking us.

 

[tommyGunZ]

Iran was planning on attacking us.  Now they are really, really planning on attacking us.

No.  Now they are really actually ATTACKING us. 

 

[FreeBaGeL]

Thanks Tim. I get it that you are concerned. I know many are.

What my buddy (who hates Trump) is saying is that you are massively over reacting. And I always look to context on things. This is a guy who LOVES to find things to rip Trump over. He's one of the last guys I know who'd minimize something bad from Trump. That's why his take surprised me. 

And that's what I'm trying to get my mind around. 

Well he has a theory that he's basing this off of while providing nothing to support it other than "this is what I believe".

Somewhere out there is some Trump hater who is not worried about the Iran situation because of this month's astrology reading.

I don't know whether your buddy's claims have any more validity than the astrology person.  Maybe he's actually done the research.  We have historical data on the market so it would probably be simple enough to find out.

 

[Kal El]

Iran was planning on attacking us.  Now they are really, really planning on attacking us.

Trump wanted his war. Now he can go fight it.

 

[The General]

The market isn't worried...until it is.

 

[djmich]

I think the market is an informative barometer, but not perfect.  Would agree with your friends "market based assessment".

Also agree with The General...its not worried, until it is.  Saying goes escalator up, elevator down...Oil just popped another 4% and market down almost 1%... so thats starting to say something, could accelerate fast.

 

[Juxtatarot]

Honestly, how the market will react is the least of my worries right now.

 

[The General]

Looks like the market got worried. Tomorrow will be no bueno.

 

[djmich]

Honestly, how the market will react is the least of my worries right now.

Sure, but that wasn't the point of the thread.

 

[General Malaise]

I mean.....Gold did pierce $1600 tonight.  That's significant on the worry meter.  IMO.

 

[djmich]

Market is liking how its playing out over the past hour.

 

[Joe Bryant]

Honestly, how the market will react is the least of my worries right now.

Not at all the point of my question from earlier today. 

 

[Joe Bryant]

I think his priorities in life are calibrated very differently from mine and I think his measuring stick for "things important" is also very different from mine.

What would you say his priorities are in life are? Or how he measures "things important"?

 

[jon_mx]

The market is both capable of over-reacting and under-reacting.  It may be a good indicator of public sentiment, but that doesn't make it right about the reality.

 

[The Commish]

What would you say his priorities are in life are? Or how he measures "things important"?

With the limited information, I can't possibly speak to his priorities. It does seem rather clear to me that the stock market (maybe money?) is important to him.  And he apparently uses the stock market to determine his level of "worry" in events like Iran.  None of that is true of me and the way I approach life or international incidents. 

 

[djmich]

With the limited information, I can't possibly speak to his priorities. It does seem rather clear to me that the stock market (maybe money?) is important to him.  And he apparently uses the stock market to determine his level of "worry" in events like Iran.  None of that is true of me and the way I approach life or international incidents. 

Not sure this path isn't the same as Juxtatarot.  The original post wasn't some sort of attempt to talk about a persons priorities in life or whats important to them.  Clearly the guy who works closely with Wall Street cares about the stock market.

It was to discuss whether or not the stock market is a good predictor of the outcome of events.

Some folks felt the need to come in and get on their high horse about how their life isn't about money and how they approach international incidents.

 

[The Commish]

Not sure this path isn't the same as Juxtatarot.  The original post wasn't some sort of attempt to talk about a persons priorities in life or whats important to them.  Clearly the guy who works closely with Wall Street cares about the stock market.

It was to discuss whether or not the stock market is a good predictor of the outcome of events.

Some folks felt the need to come in and get on their high horse about how their life isn't about money and how they approach international incidents.

The sentence that stuck with me was:

He's saying the financial markets are a huge indicator of how worried one should be about things.

and "about things" seems pretty all encompassing.  If that wasn't the intent or the question, that's fine.  I have no idea what he's asking at this point if that's the case.  My initial comment was that this guy looked "at things" in a significantly different way than I do.  Not knowing anything else about the guy that was my "thought" about his post.  I didn't try to say my way was better or that the guy was an idiot for thinking what he thinks.  I simply said that it seems pretty clear we approach things differently.  That's far from the classification you are trying to place upon me or Juxt

 

[djmich]

You used "priorities" and "things important".  Those were not in the original post.

He thinks the markets can be a "tell" in terms of direction of events, that was clear from the original post.

You don't, thats ok.  But the conversation I think would have been more productive if you discussed why you dont believe the reaction in the stock market has any correlation to outcomes of events.

 

[timschochet]

It seems to me that in terms of this particular conflict, the most urgent economic concern for the average American won’t be the Dow Jones; it will be at the gas pump. 

 

[djmich]

It seems to me that in terms of this particular conflict, the most urgent economic concern for the average American won’t be the Dow Jones; it will be at the gas pump. 

  I give up

 

[beef]

I'm not sure anything can "worry" the market right now.

 

[adonis]

I think people put too much faith in what the market does on any given day and what it means. 

In some ways, it reminds me of folks saying natural disasters are God's will, and other reading of the tea leaves.  The market can be said to be saying almost whatever you want it to.  Look at it as a whole, by segment, individual commodity, commodities, inflation, look at gold, look at hedges...looks at the uncertainty index, look at futures and what people are doing with options.  

There's a veritable endless number of ways to say the market is showing what you think it's showing,, and the fallout from being wrong about one's claims is almost zero.  Barely an accountability when trying to apply the market to political or other considerations in the broader world.

Bottom line: The market is good at reacting to news, assimiliating it, and determining how said news can affect stocks in the short term.  The market is bad at predicting the future.

Case in point is the 2008/9 financial meltdown.  Everything was fine up until news started breaking, and reactions to the news started taking place.  Few people in advance could've predicted the outcomes of a lot of pieces in motion at that time, and tons of people were caught unaware.  Corrections, adjustments, crashes like that happen reasonably often, and if the market was prescient, it wouldn't.  If it was better at predictions, it wouldn't be surprised so often.

 

[djmich]

I'm not sure anything can "worry" the market right now.

It sure seems that way beef.

Last night the market basically said "I'm a little worried" and then "I might like where this is now headed".

But a lot of other factors propping the market up.

 

[djmich]

I think people put too much faith in what the market does on any given day and what it means. 

In some ways, it reminds me of folks saying natural disasters are God's will, and other reading of the tea leaves.  The market can be said to be saying almost whatever you want it to.  Look at it as a whole, by segment, individual commodity, commodities, inflation, look at gold, look at hedges...looks at the uncertainty index, look at futures and what people are doing with options.  

There's a veritable endless number of ways to say the market is showing what you think it's showing,, and the fallout from being wrong about one's claims is almost zero.  Barely an accountability when trying to apply the market to political or other considerations in the broader world.

Bottom line: The market is good at reacting to news, assimiliating it, and determining how said news can affect stocks in the short term.  The market is bad at predicting the future.

Case in point is the 2008/9 financial meltdown.  Everything was fine up until news started breaking, and reactions to the news started taking place.  Few people in advance could've predicted the outcomes of a lot of pieces in motion at that time, and tons of people were caught unaware.  Corrections, adjustments, crashes like that happen reasonably often, and if the market was prescient, it wouldn't.  If it was better at predictions, it wouldn't be surprised so often.

Overall agree. 

The bold is interesting, everything depends on timeframe.  So not necessarily disagreeing but a counterpoint would be we are well ahead of where the market was in 2009....the market was right on the long term horizon.

 

[The Commish]

You used "priorities" and "things important".  Those were not in the original post.

He thinks the markets can be a "tell" in terms of direction of events, that was clear from the original post.

You don't, thats ok.  But the conversation I think would have been more productive if you discussed why you dont believe the reaction in the stock market has any correlation to outcomes of events.

Right he said "huge indicator of how worried one should be about things"  People don't typically need "huge indicators" for things that aren't important or a priority.  I read the post completely differently than you I guess  and I certainly don't see where you came up with the second bold statement.  That's not my belief.  It's demonstrated to be the opposite in a very "water is wet" sort of way which is why I think there is more to what Joe was asking than what you're asserting.  Joe doesn't typically ask rhetorical questions.

If he'd like to clarify what he's asking, I'm all for it.  Otherwise it seems like I am taking this off on a tangent and will bow out and observe.  I'll just say the stock market is very reactionary especially when it needs to account for something it believes it hasn't yet and is a terrible predictor of the future.

 

[adonis]

Overall agree. 

The bold is interesting, everything depends on timeframe.  So not necessarily disagreeing but a counterpoint would be we are well ahead of where the market was in 2009....the market was right on the long term horizon.

I assume the topic is asking about more short term changes and how successfully those “predict” the future.  As in, “if the market isn’t worried I’m not worried”...I think that is a misread of what the market is good at predicting.

 

[beef]

It sure seems that way beef.

Last night the market basically said "I'm a little worried" and then "I might like where this is now headed".

But a lot of other factors propping the market up.

I don't even know what amount of a drop I'd need to see to think the market was worried either.  300-400 point swings are kind of common.  Not just weekly swings either, sometimes daily and often.  Overall we've seen the market hit 26.6k then drop to to 23.8k.  Back up to high 26k, then the Dec '18 drop but right back up again.  We break 27k, drop to 25.4k, and right back up to 27k again.  And then 28k, and 28.5k.  Seriously, even if it dropped 3500 points to 25k that's still not bad overall considering a 20k Jan '17 starting point, or the 18k 2016 election night.  You could call that "correction" and still not be worried.    

 

[djmich]

I assume the topic is asking about more short term changes and how successfully those “predict” the future.  As in, “if the market isn’t worried I’m not worried”...I think that is a misread of what the market is good at predicting.

You may be right.  Its folks spending billions to manage trillions so you'd think there is some value there, but not sure how much.

If we use a recent sample case of one, last night, so far the initial muted market reaction to all of the hyperbolic news seems like a "micro time-frame" win for the market.  Could be proven wrong today.

 

[adonis]

You may be right.  Its folks spending billions to manage trillions so you'd think there is some value there, but not sure how much.

If we use a recent sample case of one, last night, so far the initial muted market reaction to all of the hyperbolic news seems like a "micro time-frame" win for the market.  Could be proven wrong today.

Definitely value in hive mind, but most of that value comes from digestion of solid information, being able to assess risks based on models, etc. 

I think with Iran and Trump, there's not really a model to help handle this situation to guide investment decisions.  It's true folks don't seem to be freaking out yet, but for me that goes back to that not being reassuring for me, because this kind of situation is inherently hard to predict.

 

[Joe Bryant]

With the limited information, I can't possibly speak to his priorities. It does seem rather clear to me that the stock market (maybe money?) is important to him.  And he apparently uses the stock market to determine his level of "worry" in events like Iran.  None of that is true of me and the way I approach life or international incidents. 

The bolded is what what I would assume. Based on what I wrote, I don't know how one could determine his priorities or how they were calibrated.

That's why I didn't understand when you said, "I think his priorities in life are calibrated very differently from mine".

I'd hoped to make this not about my friend. I was careful to be clear and include this in the original post.

And make sure to understand: This isn't about "everything is good as long as the 401k, yo". He's saying the financial markets are a huge indicator of how worried one should be about things.

I'll bow out of this one. All good. 

 

[The Commish]

The bolded is what what I would assume. Based on what I wrote, I don't know how one could determine his priorities or how they were calibrated.

That's why I didn't understand when you said, "I think his priorities in life are calibrated very differently from mine".

To be clear, based on what you posted, that's what I think.  I do acknowledge I could be completely wrong.  I obviously don't know the guy...just going by what's posted.  For the overall theme of your original post, If my initial interpretation of "He's saying the financial markets are a huge indicator of how worried one should be about things." is wrong like I've been told, I'd like to understand what you/he meant or were asking.  

 

[Sheriff Bart]

The market isn't worried...until it is.

It's as if you are in a mine, and there could be a collapse at any moment, but probably not.  The issue is when the enevitable collapse does happen the people yelling at you to get out will already be out.  So IMO you should always demonstrate at least a little more caution than the experts recommend. Get out of that mine with them. 

 

[The General]

Looks like the market got worried. Tomorrow will be no bueno.

Nevermind. Game on.

 

[Leroy Hoard]

Trump wanted his war. Now he can go fight it.

Like he did when he was eligible?

 

[Maurile Tremblay]

Well he has a theory that he's basing this off of while providing nothing to support it other than "this is what I believe".

Somewhere out there is some Trump hater who is not worried about the Iran situation because of this month's astrology reading.

I don't know whether your buddy's claims have any more validity than the astrology person.  Maybe he's actually done the research.  We have historical data on the market so it would probably be simple enough to find out.

A quick summary: https://www.investopedia.com/solving-the-war-puzzle-4780889