Why do Capital Markets Move Up and Down?

Most recently the capital markets have taken a breather after a very long, almost unstoppable, run in an upward direction.

Have you eve wondered what exactly makes the markets move in one direction or another?

The true answer is pretty simple; No one is 100% certain, especially in the shorter term!

Often many write, (present party included), on the reasons for capital market movement and the recent events that have occurred. Over longer periods of time generally the markets are relatively rational, but not always. Just as some days we wake up and feel terrific, and other days for no apparent reason, we rise to a long, tough, less positive day, the capital markets will suddenly take a negative tone as well, sometimes for almost no apparent reason.  

Many who have visited our office comment on one of our market reminder sayings written on our window with erasable ink “The Markets can stay irrational longer than you can stay solvent.”  This saying became very popular by short sellers during the late 90’s tech bubble, as many short investors were correct in the direction and the valuation, but went broke just before they were vindicated.

Here are a few items that dramatically change market direction, Big Multinational events, Money Flows to and from certain areas of the markets, Investor Confidence, and often peer pressure. For peer pressure examples, take a look at the Financial Times  Market Macro Map popup, of the world markets, over a few mornings, and see how the tone is set globally and moves across the world.

Many times we agree with the market headlines on the direction and reason, but not always. There are times when markets move, especially in the short term, for reasons that are unknown to anyone.

Have A Good Day!


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