I cannot make sense of the stock markets. The arguments put forth in this article regarding the intractability of keeping the Strait open after an existential attack on the Iranian government are well known. The zealots have planned for this, and they intend to punish the world so that it never happens again. This makes the past two days of trading inexplicable to me. Even if you chant "The market only goes up." One can hardly avoid knowing that it has taken as long as 25 to recover after a crash. Of course, that was after disastrous tariff policies, and this time we have that, plus the energy cost shock to global markets, producers, and consumers. And then there's our teetering credit markets, and AFAICT, a financial system not fully recovered from the strains of the two financial shocks that have already hit in this century. And the dollar, while not shaky, might not survive the government bailing out a real crash.
So what powers the market here? Whence the source of this merchantiel merriment, however long or brief? Or was this just institutional investors following their prescribed and necessary path?
Question Arising from The War with Iran
byu/Neither_End8403 inStockMarket
Posted by Neither_End8403
4 Comments
> I cannot make sense of the stock markets
The stock market and its price discovery mechanism represent the combined wisdom and needs of every investor in the game, everywhere on Earth. From Joe Schmo retail investor to the biggest pension funds or hedge funds, people playing on time scales ranging from seconds to decades.
To think that you, personally, are going to “make sense of it” especially on short time scales, is naive.
Feels, I feel like the market is primarily being propelled by AI stocks and related industries. Also the tax cuts which always produce a temporary sugar high in the market.
I was just arguing the other side and I have a thought.
Zoom out on oil. 2008, 2014, 2020, 2022. They’re all non-oil driven price events. I argued (like a few minutes ago) that you don’t get this kind of price swing without major problems, major consequences. But perhaps this time is actually different. They’re messing around with oil supply directly, so maybe this time the oil price action *is* isolated from world events and is purely market distortion.
In truth, I think the ‘isolation price action’ theory will drive investment until something substantial breaks and the bottom falls out.
My gut feeling is that investors are betting that Trump will do what he can to prop up the market before midterms.