As most analysts are claiming the dow jones is crashing and it’s due to tariffs and interest rates. I’m not sure I am buying it. We are human beings in a world economy. To just watch the domestic indexes of ones country is going to set you up for some serious losses.
For example, look at these charts below. You will see two Dow Jones charts, but one is in currency of the US the other in the currency of the Euro. It looks quite interesting does it not? You see from a person who is trading in Euros, the Dow simply looks to be bouncing on support. So if a big trader is living in Europe, he or she is really not seeing the crash a more domestic investor would be seeing right now.
Expressed in US Dollars:
Expressed in Euros:
First Day On November:
The open on November was pretty positive for the Dow and the markets. We are up 200pts and you can see after these big dips, the market immediately recovers. Yes, its a big dip but this is due to not many people in the market worldwide, so volatility is quite high.
People Are Scared of Volatility:
I remember going into a meeting with my mothers financial advisor to see what his thinking was with the markets and what he suggested my mom put her capital. It was quite interesting that many of the financial institutions were legally bound to putting capital into bonds, regardless of the almost certain rise in interest rates.
So, for bond holders if the interest rates go up, then people in bonds will lose money. And with the rise of interest rates, since we were literally at -1 at a point. It will now surge higher then ever. This will totally destroy grandparents retirement funds.
The other feedback I overheard was that the financial advisor said it was too risky to be in equities. I thought, “Are you serious right now???” Where else should a grandma or grandpa put their cash? In a bank for a measly .25% interest! Yeah right.
You can see the conundrum. Advisors are legally bound to put you into bonds for the majority of your capital. But we know interest rates are most likely to rise like crazy. So then who wants to sit in cash, well a lot of people scared to enter the market due. So this creates some big dips and moves, no one wants to play, thus the markets go up and down like crazy.
While I don’t manage anyone’s money or give financial advice. I can only observe the markets and share my feedback on what is happening on a global view. The markets need to watched from all points of view. This is from a Europeans perspective, Asian, American, etc.
Many consider the market to risky, but you would need to be a long term trader for this type of market. Currency is everything. Watch the dollar and watch out for the Euro. As these two currencies are looking to battle, especially with the pension crisis that looks to be coming in Europe.
Not Out of The Woods Just Yet
It will be interesting to see what the markets do after the elections here in November. The worry and market moves are mostly due the midterms. Capital is moving, but is right now cautious due to who is going to be in office. While I don’t like getting into politics, the markets move based on what happens in politics. So let’s keep an eye to see how things shape up.