Today was yet another painful market crash. Jerome Powell and Janet Yellen spoke today and they reiterated more of the same: inflation projected long term to be ~2% and they intend to keep it that way. So with no real “news” why did the market crash? Yet again?
This is the third crash as JPow spoke (or the day after) when there was no new news. Because he didn’t announce anything crazy that indicated the Fed was going to actively help the stock market – this isn’t the Fed’s job. The Fed should NOT care about what the market is doing. Yet institutional and retail investors are going through another mass selling day again.
I think as a society and particularly investors since the pandemic are accustomed to the instant gratifications of high returns. When there’s no obvious opportunities on the market, these weenie babies (term coined by Meet Kevin) paperhand their losing stocks and try to look for “the next big thing”.
In the long term this is almost always disastrous as selling low is locking in your losses. And math says %gain needs to be greater than % loss to even out at the end of the day.
Short Math Section:
- Starting with 100.
- If you lose lose 25%, you have remaining 75.
- And if you gain 25% on the 75, you end up with 93.75.
- You actually need 33% gain to make back the 25% loss.
What’s the morale of the story? Diamond Hands, baby. AND STOP BEING IMPATIENT!!!