Stock market news today about volatility and market behavior. A bit about how people sell stocks low and buy stocks high. Also, I’ll give you my 100% correct stock market prediction for 2019 and Buffett’s view too.
Stock Market News – 100% Correct 2019 Stock Market Prediction
What does value investing really mean? Q1 2021 hedge fund letters, conferences and more Some investors might argue value investing means buying stocks trading at a discount to net asset value or book value. This is the sort of value investing Benjamin Graham pioneered in the early 1920s and 1930s. Other investors might argue value Read More
Good afternoon fellow investors, welcome to the stock market news with the long term fundamental twist. Last week we discussed what we can expect from stocks in the long term. We explained why are stocks crashing from a fundamental basis. The chances for a recession and the influence of best financial engineering on stocks in that video on YouTube got more than 20000 views. So thank you for watching and thank you for subscribing today. We are going to shift from the fundamentals to human behavior. And these are the topics that I want to discuss today. Why the stocks crash that fast. We have seen huge declines in the last month. We will talk about the exit door and human behavior. How come stocks go up 5 percent in one day as it happened on Wednesday. Is this crazy or bizarre or normal for such an environment. What to do with volatility. And then I'm going to give you my stock market prediction for 2019. First I'm going to give you my 100 percent stock market prediction. That is correct. Every year and then I'm going to discuss a little bit more about the market before we start with the news just quick answer the poll that I have made.
So whether you think stocks will go up more than 20 percent in 2019 more than or around 10 percent will stay equal or will decline 10 percent or even more than 20 percent in 2019. Please answer the poll so that we can do that before the end of this video when I will give you my stock market prediction.
Let's start with human behavior. And there are four topics that are extremely important from psychology that relate to stock market behavior those psychological topics are that we are wired to think exclusively we look for instant gratification. Thus we speculate speculation and we take part in herd behavior. All of this is perfectly natural as it kept us alive over the last few million years. However things might get tricky when applying this psychological wired in traits to investing. So let's start by talking about exclusive thinking. If you take a look at any stock chart especially longer term stock charts in this case I'm looking at the S&P 500 over the last 20 years. You see that stocks either go up or down. There is no in between. There are no five years of stocks being flat with small fluctuations stocks usually go up on little volatility for a long time like it was the case from 2002 to 2007 or 2009 to 2018 and then go down on high volatility in a very short amount of time. More about volatility later. So as I said stocks take a long time to go up but then crash instantly 50 percent down from 2000 the peak in January 2008 to the bottom in 2002. Similarly from November 2007 to March 2009 we had another crash of what was it 40 to 50 percent depending on what you're looking at. And currently stocks have been down seven point five percent just over December which is very very fast similarly to what happened in January February 2008. If you remember when the turmoil started.
Now stocks move up or down because we humans are wired to think think exclusively you cannot like OK I like chocolate 70 percent and dislike it 40 percent. I like ice cream 80 percent dislike it 20 percent and therefore I love ice cream more than chocolate. No. You either love ice cream and you don't like chocolate or you either love both. Ice cream and chocolate. And you really love the combination. But for humans it's hard to.