Earlier this month stock markets worldwide fell about 8-10% on average, with the S&P500 losing almost 200 points from its record high of over 2000 points and the Euro Stoxx 50 dropping below the 3000 points mark for the first time in six months. This unexpected downward move caught almost everyone by surprise. Over the last couple of days, however, most stocks have recovered from their losses.
When asked what his clients thought of the early autumn market swings, RandomDude You’veNeverHeardOf of Big Capital Management explained most of his clients sold off their assets trying to diminish their losses. “We helped them get out of the market just in time. Because most investors remain wary our portfolio managers have decided to mostly keep cash.”
Industry experts agree that markets started to tumble after a report from the European Agency of Unemployment released a study stating that job creation will remain at an all time low until at least 2018. Left-wing politicians claim low job creation is the result of austerity measures implemented by right-wing governments all over Europe. The truth is, no one really knows for sure.
Professor ReallyImportantAcademic from the London School of Economics debated whether the Agency of Unemployment’s study is accurate. The report indicates a margin of error of plus or minus 350,000, with the chance of the numbers being revised at least nine times over the coming four years being over 67%. Unemployed folks also said they don’t care about any of the report’s findings.
Something that is proven to be true, however, is the fact that the start of October’s losses can be attributed to a couple random marginal sellers being slightly less bullish than a marginal group of buyers. This seems to be in line with earlier findings in the field of behavioural psychology, namely that on any random day there’s a 50% chance that more hedge fund managers have a bad rather than a good day, and as a result decide to dump their assets.
When the first losses started to materialise on the European stock exchanges in the late-afternoon on some random day at the beginning of October, US securities reacted immediately by following the downward trend, although macro-economic indicators in the US were exactly the same as the day before. The net profits of the thirty largest corporations in the US also remained unchanged. Nobody seems to know why.
Interestingly, struggling stocks boosted US bonds, especially the 10-Year Treasury bond, to its highest yield in three years. President Obama declared he wasn’t too happy about this, which investors understood in a myriad of ways. “Obama’s statements have about 46% of our traders believe his administration will tighten regulation on Wall Street, while 51% of our employees decided to stock up on T-bills. 3% of our traders have no idea what to think,” eplained Mr. AnotherRandomDude from Shady Investments over the phone from his offices in Chicago.
Gold advanced over 2% because random individuals are flocking to safer investment vehicles to maintain their portfolio’s value. Another reason for the gold price increase could be the start of TV show the Walking Dead’s fifth season. With stocks and cash having no immediate value in a post-apocalyptic world, it is likely that fans of the TV series decided to prepare for the worst by investing in tangible valuables.
Some bloggers seem to think they know the answer to the current bad spell. Jason Fieber thinks he didn’t lose a thing when his portfolio took a $5,000 dive, while Steve Kapitalust thinks we’re just looking at the wrong graphs. Of course, what do they know? Anyone can throw some information out there after browsing Google for five minutes.
Even though the second half of October showed great promise for a recovering stock market, analysts remain uncertain. Long-term investors, however, still don’t care.
This article is obviously a parody on much of the panicky stock market news out there. Everyone I know was shouting at me to get out of the market at the beginning of October, even though nothing has changed significantly from one month ago to warrant a sell-off, especially for a long-term investor.