So, the market finds itself in correction territory once again. That’s when the averages are down about 10% but not yet 20% which would be a Bear Market.
The most recent selloff is being ascribed to the ‘Facebook Data Breach’. But in late January when the market started to roll over it was fear of inflation, manifested in good job numbers. We were just getting that behind us when President Trump tweeted that ‘trade wars are good and easy to win’.
The real question is whether or not these events are really the cause of the sell off, or when the market sells off do we just look around and pick what we think is the cause.
Take this morning, AMZN was down, below 1400 at 11:30. Why? Well CNBC’s answer was that Trump was going after Jeff Bezos because of his ownership of the Washington Post. Clips were played of him saying exactly that.
Problem is, those clips were old, like 2 years old. He didn’t say them yesterday. In fact they could have played those clips on March 18 when AMZN was ringing the bell over 1600.
I believe sometimes the market sells off, takes a breather, gets a bit nervous for absolutely no reason. Then the sentiment changes. It can happen both ways, up and down.
However, the Bears always know the reason because they have been crowing about them all along. I’m sure you could find lots of Bears on March 18th saying AMZN was overvalued.
Being Bearish always sounds smart. Bears are all about you not losing money, about preserving your portfolio and about getting a better price. Bears like technical analysis or fundamental analysis because you can find a Bear case in either one.
But making money trading requires that you take some risk, that you put some money in a few areas that don’t fully make sense and is not obvious.
Josh Brown retweeted a David Wilson (@TheOneDave) chart a couple of days ago. In 2003 when NFLX was mailing DVDs out one at a time, it would have been hard to imagine that today NFLX would have a market cap bigger than GE.
I didn’t see that coming, did you?
You know who else didn’t see it, for sure? NFLX Bears.