The Current State of the Stock Market

The Current State of the Stock Market

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.


    1. Love your new moniker, Will! 😀

      Damn, I wish I had a few thousand laying around to invest during the dip! I only used September’s salary to buy some more stocks.

  1. haha nice article NMW 🙂 You made my day

    quote/ 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. /quote

    So they basically mean they’ve sold with a loss and are now screwed because the market recovered.

    Fortunately for them they can charge their clients another brokerage fee in the near future to buy the same equity for a higher price.


    1. FRD,

      Great point, should have added that to my post! The only ones getting rich from a volatile stock market are brokers because people incur huge transaction costs on themselves by constantly buying and selling.

      I hope you were able to take advantage of the dip!

      Best wishes,

  2. NMW,

    I’m selling everything and buying GOLD! The zombies are coming. And when the zombies come I can use the gold…for..wait, can you eat gold??

    Thanks for the mention!

    Best wishes.

    1. Seems like you were right to do so, Tawcan! All major stock markets are way up since then.

      Keep it up,

    1. Stef,

      I’ve been quiet these last few days indeed. Busy at work! I’m trying to pick up the pace again.

      Humour is a great way to deal with bad events and put things into perspective again. As long as the dividends keep rolling in I couldn’t care less about the last market slump.


    1. You should be on top of these things, Henry! How else are you going to get rich if you don’t cash out when the markets start to decline!? Oh, wait… 😉

    1. Weenie,

      Thanks! Just me and my friends hanging out last weekend. 🙂

      Great job keeping your monthly investming plan going. It doesn’t matter at all over the long run what happened in October 2014. You probably won’t even remember in a year from now.

      Have a great weekend,

    1. AlphaTarget,

      Thanks for the compliment, much appreciated.

      Seems like you went all out with the energy stocks! I also bought some BP and RDS because they were so cheap. Even though oil prices have been declining for a while, I don’t think the fundamentals of those businesses warant such a price decline or a dividend cut in the future.

      Keep it up,

  3. Hi NMW,

    Good to see you back writing.
    October was a great month for me.
    I did buy RDSB, Munich re (averaging down), Exmar. I did sell Exmar today after a 15% raise in 2 weeks. But a 15% return was to tempting to skip and as long we have no capital gains taxes we can still take advantage of such short term investments( or in this case I would call it speculation).

    I will probably use the free capital to invest in WDP or Texaf.


    1. Geblin,

      Thanks! I was happy to be typing away at the keyboard again too. There’s something very cathartic about writing.

      Seems like we had the same idea of buying RDSB!
      A 15% increase in just 2 weeks is insane! Are you hoping to get in again at a lower price point?

      I’ll definitely check out some of the companies you mentioned. Always fun to read up on new businesses.

      Keep it up, pal!

      1. If exmar drops back below 10 EUR I might pick them up again. A 15% raise in 2 weeks is indeed insane so I took advantage of it.

        Have a good weekend.


  4. With all the information of past crashes and corrections out on the internet people are still panicking in 2014? Well if that’s the case i better get greedy off their fear 😉 but buying a couple shot guns and a machete would be an alright investment too right? even with zombies and stuff haha

    1. DD,

      Apparently they are! That only means more and better buying opportunities for the likes of us, so what’s not to love? 🙂

      Good luck buying a shot gun and machete in Belgium! If there’s ever a zombie outbreak I’ll probably head for the nearest military base to grab one of the seven guns of Belgium’s military.


    1. Jason,

      Thank you! Greatly appreciate the kind words.

      Next time I’ll send my article to a big media outlet to see if they’re willing to publish it! 🙂

      Best wishes,

  5. I must admit I did get a little annoyed with all my investments dropping last month, so I tried not to look at my portfolio so much. I’m currently taking a course on investing for beginners and my instructor mentioned that October tends to be a bad month for stocks. I looked it up on Investopedia and it was during October when the big stock market crash of 1929 took place, which led to the Great Depression. I can only imagine how scary it must have been to be an investor at that time.

    1. Karen,

      Seeing your portfolio drop and losing money never is fun, so it’s actually quite a good strategy not to check up on its overall value too much. By doing so you decrease the chance that you sell in a panic.

      Didn’t know that about October! Weirdly enough the month ended on a high. Being an investor in 1929 must have been really scary indeed. Even though I wasn’t investing yet in 2008, it’s interesting to see how much people panicked. Turned out they were wrong though with most markets being over their 2008 level already!


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