You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets.
Sentiment: NEGATIVE
What we need to understand is, one, that there are market failures; and two, that there are things like asset bubbles and irrational exuberance. There are periods of booms, bubbles, and manias. These things, if left to themselves, can lead to crashes, to busts, to panics.
People often panic when the markets go down and sell off their stocks - but then they aren't in the game when the markets are doing well.
People stop buying things, and that is how you turn a slowdown into a recession.
If you're saving for the long run, it's actually a good thing when the market is down because the more shares you have, the more you can potentially make when markets rise. And over time - decades, not months - the markets rise more than they fall.
I've lived through periods of illiquidity before. Asset prices come down. The economy slows or even goes into recession. Then the cycle re-starts. We buy at lower prices with less leverage.
Markets are frequently ahead of, and often out of sync with, the economy.
Every time there is a recession, consumers will typically be more cautious, more conservative, take more time, and make more serious price-performance trade-offs.
The financial markets generally are unpredictable. So that one has to have different scenarios... The idea that you can actually predict what's going to happen contradicts my way of looking at the market.
I can never predict what the markets will do. Sometimes it does the exact opposite of what I would have expected.
The markets are much more interested in America's long-term trajectory than they are in feeling that there is an acute short-term crisis.
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