Wednesday, April 1, 2009

Explaining the Markets

When Obama was elected in 2008. The market sold off hard into the election down, Dow down 4500pts, when it seem he would win. After Obama actually won the election in November the Dow fell another 2000pts, less in a month, then recovering a bit before a final plunge of 3000pts since his election. The market finally bottom in March of 2009 and has been straight up since, defying all conventional wisdom. 

It is because the herd thought Obama would be bad for the market and sold off before his election and then when he actually won the election, the final hold out sold everything, before having to climb back up. Since the market is always anticipatory, it will always do the opposite of what most people think. That is priceless advice after 25 years of trading!

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