Last Week’s Market Crash Was a Wake-Up Call to Investors
Many investors seem to have been lulled to sleep by the stock market going only in one direction for the last several years, enjoying record returns on their stocks.
Last week was a cold bucket of water for them:
Unfortunately, the dream is now over and cold harsh reality is starting to set in:
The scariest thing about the market right now is the shocked response of traders who had become accustomed to the unsustainably placid conditions that have been unceremoniously swept away.
The precise timing of the market plunge was a surprise, and it has evidently unnerved some investors. But while it may seem harsh to say so, after so many months of fizzy profits, a downturn was long overdue.
“The movements we’ve been having the last couple of weeks may not be pleasant but they are entirely normal, on a historical basis, ” said Ryan Detrick, a senior market strategist for LPL Financial.
Based on the historical record, “normal” in the stock market includes unsettling conditions of the kind we have been experiencing lately. More of the same is likely in the months ahead: gut-wrenching swings down as well as up, rather than the steady gains that evidently lulled some investors into complacency.
As I have said in other posts, I have never really believed in the “Obama recovery.” What Obama did was just paper our problems over with debt and manipulation of the markets, and it may be that we are now seeing the bill for that come due.