Mar

26

An old spec in early 1900 wrote that panics cause markets to fall by 30% that tend to reverse by 1/3. Looking at the S&P this would put us to roughly the area we are now. Is there any scientific evidence to this claim?

anonymous writes: 

Fibonacci retracement to either 38% or 62%? Pretty natural for a shock, like the action of a released spring. That's only for the short term.

In the intermediate to longer term for the current case, stocks (in the US in particular) are expected to go higher.

Four reasons: 1. The virus or at least the scare or the impacts of it will be negligible in a couple of months; 2. The unprecedented rescue packages will kick into effects (inflation or consumption); 3. The very likelihood of a war will intensify; 4. The world will not be the same, but innovations in a lively economy will again realize high growth.

anonymous responds: 

Could you comment on why you think the probability of a war will increase?

anonymous replies: 

First, China rulers need a war to shift internal tensions. Attack on Taiwan is very likely during this introspection period in the world. They might have actually conspired for this opportunity.

Second, the huge demand for China to compensate for world losses will very likely lead to war.

Third, if the world find out that the spread of the virus was planned, a war is inevitable. 

anonymous responds: 

Thanks. Concur with all three arguments. If China decides to invade Taiwan, chances are they may may have first preemptive strikes against some US capabilities in the region as the US will for sure intervene to blunt the aggression against Taiwan. There are four US carrier strike groups in the Pacific. Never have had so high a carrier strike group concentration in the Pacific since WWII.


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