Corporate earnings may be mixed, but consumers are back. Retail sales rose by 1.9 percent, which helped fuel a market rally. However, that rally faded out on Friday afternoon, as ebullient shoppers mean that less stimulus may be needed.
That forward-looking notion, against the backdrop of a lackluster earnings season so far, indicates that the stock market can perform well, even as the overall economy continues to struggle.
Now here’s the rest of the news:
The Pandemic’s Financial Risks: Echoes of 1987? — By John Persinos
Today is a dubious anniversary: “Black Monday,” the market crash of October 19, 1987. Thirty-three years ago, stock markets around the world collapsed. The meltdown started in Hong Kong and spread west to Europe. The United States was hit after other markets had already plunged. The S&P 500 plummeted 20.5%, from 282.7 to 225.06. The Dow Jones Industrial Average fell 508 points to 1,738.74, a one-day decline of 22.61%. At the time, Black Monday represented the single largest drop the U.S. stock market had ever experienced.
Program trading bears much of the blame for the crash. Institutions use these programs as a hedge against market weakness. Three decades ago, this complexity was new and little understood. On Black Monday, as loss targets were reached, these programs automatically liquidated stocks. Lower prices caused more liquidation. The chain reaction accelerated. Leading up to the crash, warning signs were abundant. The economy was slowing. International tensions were worsening. Political unrest was growing in Europe. The U.S. and China were at economic loggerheads. Nuclear tensions were flaring between East and West. Stocks were grossly overvalued. The strong U.S. dollar was hurting U.S. exports.
The White House was dismantling financial rules designed to break a market collapse. Passive algorithmic trading was spreading as a substitute for active stock picking. Yikes! Sound familiar? It should. I don’t think another 1987-type crash will occur anytime soon, but we’re probably facing a correction over the near term of at least 5% to 10%. Below, I examine current risks. I also steer you toward an investing method that leverages these imbalances for profit.
October 19, 2019
Sometime it is necessary to dismiss one’s advice! Often it is best to do so without injuring feelings or offending anyone! This is not easy to do without some preparation … some advice.
Some people are happy to give advice; they feel like they are contributing something helpful in their own little way. But the problem starts when the recipient of the advice doesn’t follow it or has another idea. The adviser might get offended because he will feel that his advice is not being valued. Here’s how to dismiss someone’s advice without hurting his feelings.
- Show your appreciation. Tell the person how much you appreciate his advice, and that you will give it some serious thought. Even if you will not really follow his suggestion, the act of merely considering it is enough to show your respect.
- Reserve the advice for potential future use. After a day or two, tell him how his ideas could be of great help or use, but you have also found that it is not suitable to your situation right now. But since you think it’s highly beneficial, you will keep it in mind for potential use in the future.
- Build up the ego. To build up his ego and make him feel that you respect his suggestions, ask for his advice on another subject; but this time, you tell him you’re asking his advice because you’re trying to help a friend or relative.
(No need to give any name. If he insists, pick someone he doesn’t know. This way, he won’t be able to track if his advice was actually followed.)
Asking may not be enough! 😉