Why Is The Market Down-Trending?
Before I start writing on the topic, I just liked to inform you that I had probably written my 2 MOST extensive and in-depth articles on a company on Medium - and that is definitely on my highest conviction company - Digital Turbine Inc (APPS).
Please read Part 1 and Part 2 here. A warning to you - these are over 10 mins read. That is how long it is.
One important point that was not written and I just found out lately from their latest interview with Oppenheimer is that Digital Turbine is currently working with Meta on SingleTap! This will be amazing!
Nevertheless, I will greatly appreciate if you could follow me on Medium as well. Thank you.
Back to the topic...
I have been wanting to write this post because this will remind the future me of my answers - whenever this question pops up in my head.
When there is much fear in the market, there is always a few recurring questions - like "Why a particular company share price has been down trending?", "Why the economy so good, the market is so bad?", "Why the share price is moving in different direction to the company's fundamental?"
As an investor or trader, regardless whether we believe in macro trends or TA or FA, there is a need to understand the following:
1. Share Price is forward looking ahead 3 to 6 months before the economy. Macro events can have more impact than the actual events of a particular company.
2. Share Price can also be deem as a predictor of the future economy. There is also a chance where the prediction is wrong as well.
3. These prediction is a combination of "votes" from the members within the market, a combination of different types of investors and traders. Thus, these votes may not be able to provide the "correct" choice but each individual biased choice.
4. This can also explain why TA works - if enough people look at the same points, the same consequence/actions is expected, the same results is expected. Just don't be the last one holding the bag.
5. That is why whenever we have a down-trending market, we tend to hear this phase from Benjamin Graham - "In the short term, the market is a voting machine. In the long term, it is a weighing machine." Sometimes, this is emphasized more by the bag-holders.
6. Another phase that we hear a lot in a down-trending market, is one from Warren Buffet - "Be fearful when others are greedy and be greedy when others are fearful". Just don't be greedy on the wrong company.
At the end of the day, everything matters - TA, Macro events, FA, the company itself.
But don't kill yourself overthinking it. Investing can be simple.
From TUBInvesting of Dec 2021.
If you are interested, please do bookmark this Blog or follow me on TUBInvesting FB, or Fundamental Scorecard Telegram Group (please google for the links!).
Stay tune for my next post!
Post a Comment