# Confused investor



## AlexInvestSavvy (Oct 13, 2020)

I'm still relatively new to trading stocks, but I must have a lot to learn, as I would have expected the indexes to take a dive upon rate increases, but the exact opposite seems to be true!


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## gardner (Feb 13, 2014)

Rate increases have been expected for some time now. I think any potential effects have been priced in to the market for months.


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## newfoundlander61 (Feb 6, 2011)

Agreed.


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## afulldeck (Mar 28, 2012)

Market's are forward looking. If you think its going to happen, odds are that the market has already accounted for that activity, interest rating including....


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## AlexInvestSavvy (Oct 13, 2020)

Makes sense. I can see how it's priced in.
One thing that still does baffle me though is that we've been buying like mad on instability in Russia/Ukraine...


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## Tostig (Nov 18, 2020)

In addition to all the other explanations:
1) the market is irrational;
2) the market is efficient.

How many times have I seen a stock drop after a good quarterly report? And because too many people think the same way, a small difference between forecast and actual may result in a big swing in stock price.


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## AlexInvestSavvy (Oct 13, 2020)

This also makes sense.
Yes, I can see how the swings can get very pronounced or exaggerated. Seems the markets are getting more and more "swingy" these days, especially intra-day (unless it's just my perception as I haven't been investing that long). The results can be quite impressive. Even if I made no trades, I think I would be a spectator


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## AltaRed (Jun 8, 2009)

There are always buyers and sellers in the market. If there are more sellers than buyers of a security, security price will trend down and vice versa. I've been in the market for 30 years and I don't see 1% or so daily swings as overly volatile. Certain events notwithstanding, like March 2020, we've had an awfully benign market the last number of years and it is remarkable to me we have not seen even larger swings here the last 2-4 months. With inflation, pending central bank rate increases and the Russian invasion of Ukraine, it could have been expected to have far more volatility, especially downward , than we have had. 

You need to stop looking at daily numbers, never mind intra-day numbers, to be able to see the forest rather than individual trees.


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## MrMatt (Dec 21, 2011)

AlexInvestSavvy said:


> I'm still relatively new to trading stocks, but I must have a lot to learn, as I would have expected the indexes to take a dive upon rate increases, but the exact opposite seems to be true!


Well if you think high rates are good, you'd go up.
If you think low rates are good, and they raise them by less than expected they'd go up too.


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## AlexInvestSavvy (Oct 13, 2020)

Interesting, so that means things were even more volatile in earlier years. It seems there is a stronger and stronger appetite to Buy these days...
I like that way to see it, looking at the forest rather than the trees; otherwise it's very easy to get wrapped up in it (and I don't consider myself a day-trader ; -)


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## AlexInvestSavvy (Oct 13, 2020)

Aha, yes that is true too, Matt


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## AlexInvestSavvy (Oct 13, 2020)

Seems sometimes we will take any reason to Buy! ; -)


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## MrMatt (Dec 21, 2011)

AlexInvestSavvy said:


> Seems sometimes we will take any reason to Buy! ; -)


IMO the pundits that give "reasons" are clueless.

I've never bought or sold a stock due to reasons listed in a headline.
they just say stuff that makes people think they know what's going on.


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## AlexInvestSavvy (Oct 13, 2020)

MrMatt said:


> IMO the pundits that give "reasons" are clueless.
> 
> I've never bought or sold a stock due to reasons listed in a headline.
> they just say stuff that makes people think they know what's going on.


That's an important point


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## AlexInvestSavvy (Oct 13, 2020)

I have been told there is a lot of fluff out there.
The goal sometimes is to garner an audience and say whatever will draw one's attention.


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## Tostig (Nov 18, 2020)

AlexInvestSavvy said:


> I have been told there is a lot of fluff out there.
> The goal sometimes is to garner an audience and say whatever will draw one's attention.


Well, there's Peter Schiff, Economics Explained and a lot of other permabears predicting a 90% stock market decrease.

And then there's Warren Buffet and John Templeton who tell you to buy on bad news.

So the battle between the two camps are making markets plummets and recover really quickly.


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## Boiler Room (May 4, 2021)

Depends what index you are looking at. Nasdaq, made up mainly of the high flying growth stocks some of which have no earnings, is off 20% since November. The TSX has a lot of energy stocks which are rocketing due to oil. and banks and insurance companies which will do well with higher interest rates.


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## KaeJS (Sep 28, 2010)

The market flows.
Money doesn't stay in one place.
The trick is to either be with the flow (or be ahead of it) and/or make sure you are diversified and buy and hold lots of assets so you never miss the flow and adjust your allocation accordingly.

I am currently highly concentrated in Canada, and more specifically energy and financials. I also have a large component of REITs and Utilities. Consumer Staples have been good, too. But this won't last forever =)


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## MrMatt (Dec 21, 2011)

Tostig said:


> Well, there's Peter Schiff, Economics Explained and a lot of other permabears predicting a 90% stock market decrease.
> 
> And then there's Warren Buffet and John Templeton who tell you to buy on bad news.
> 
> So the battle between the two camps are making markets plummets and recover really quickly.


Okay, then don't buy the market. I'm only half joking.

If you buy Tesla with a Price to sales of 17 or so, I can easily see a significant drop. Most of their valuation is on earnings years or more into the future.

But lets say you have a regulated utility paying 4% or so in dividends. I don't think their price is going to drop by 90%.


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## AlexInvestSavvy (Oct 13, 2020)

Very good points/observations, all.
Indeed, it seems like there's alternate currents in the market right now, sort of a tug-of-war between the bulls and the bears. It seems there are a lot of enthused investors who buy up the slightest dips (and thus an upward push). Maybe because of all the new discount brokerages with 0 commission and new investors. I'm not sure what the ratio of institutional to retail investors is, but perhaps the latter is growing...
KaeJS, you've been in the right areas at the right time, keep that going! 😊


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## AlexInvestSavvy (Oct 13, 2020)

Hopefully everyone has been in nickel, too!


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