The market started off with a bang today because of reduced inflation. It then fell back, climbed again and dropped out at the end of the day.
Reduced inflation is good, but it is only one piece of the puzzle. There are lots of negative metrics lately. I think those negative metrics won out at the end of the day.
The pollyannish mood of many market participants is holding on to some degree, but negative news is ever so slowly chipping away at that mood.
My theory is that many market participants cannot internalize the adverse economic circumstances until it hits them at home. This means they have to feel it first-hand. This is a situation that is best to understand vicariously. By doing so, you anticipate it and make personal adjustments before it affects your wallet/pocketbook directly.
As an economy goes into recession, it does not uniformly hit everyone at once. The pressure is initially felt by those in the lowest income brackets and slowly affects higher and higher income brackets. Since the higher income bracket individuals have little firsthand interaction with those in much lower income brackets, they don't see the circumstances coming for their own "wallet/pocketbook". While some income groups will be marginally affected by a coming recession, most will feel the pain firsthand sometime down the road.
Living vicariously is very important when it comes to investment! Keep you head out of the clouds
Be smart, be well-read, be aware and be successful.
