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It is the perception not the fact the rules the markets. Ira
BruceB wrote:
> -----Original Message-----
> From: Ira <ist@xxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>
> >I think a review of history will show that in all of recorded market data
> that
> >events never changed the direction of the markets for more then a day or
> two.
> >Take the Dow, the S&P or any other index and check back in time. You will
> find
> >that the wars, assassinations, market prognosticators Predictions of doom
> or >any
> >other event did not stop an up market from going up or a down market from
> >continuing to fall.
>
> I'm not so sure about that. Fear can distort a market for much longer than
> a day or two. When Iraq invaded Kuwait, the price of oil jumped from $20 to
> about $40 and stayed there for an extended period of time. The loss of the
> Kuwaiti oil flow to the world markets didn't justify such a jump, but the
> threat the Iraqis now posed to the Saudi oil fields did. Once the US air
> campaign removed this fear, the price immediately dropped, even though the
> actual combat continued for weeks.
>
> The important point here is that it is the UNCERTAINTY OF THE OUTCOME of
> external events that distorts markets, not the events themselves. If the
> the markets knew for a fact that Clinton was going to be removed from
> office, they could factor that info in and move on. The fear is in the fact
> that it looks like he will be impeached and nobody knows for sure what will
> happen in the senate trial. The longer such a trial takes, the longer the
> fear in the US financial markets could continue.
>
> Bruce
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