Down, up down, up wayy down, wayyy up. If this was a roller coaster, everyone would be sick.
Yesterday the stock market surged, supposedly on news that a trade deal with China was in the works. Today, the stock market has plummeted 650 points (right now), supposedly on news that Trump lied about how likely a deal really is. If all this is actually true, it means that Wall Street investors are idiots. They can’t possibly still be taking Trump’s tweets at face value, can they?
There’s no telling, really. In any case, explanations of why the market has gone up or down on any particular day should always be taken with a shaker of salt. The more likely explanation is shown in this chart:
I’m no expert here, but I think the stock market wants to go down, but it gets artificially boosted by fake Trump news like the lifting of tariffs. Savvy investors might realize that the news is bogus, but they believe that less savvy investors will buy into it (literally), so they start the boost, which in effect, becomes a self-fulfilling prophecy. Then everyone realizes it was a stupid buy, they cash in their short term profits, and sell.
UPDATE: Dow closes down 791 points
(via @MarketWatch) pic.twitter.com/szqkGzw2Iu
— West Wing Reports (@WestWingReport) December 4, 2018
And maybe, speaking of trade, Trump’s tweets this morning had something to do with the stock plunge and investor concerns:
"He gets basic things wrong. He can be imprecise… and it's not helpful to the markets that are looking for some certainty… " – @PhilipRucker on today's stock market plunge following the Tariff Man tweet
— Deadline White House (@DeadlineWH) December 4, 2018
w/ @NicolleDWallace pic.twitter.com/WRzNM8ZE5m