Small Group Meeting Q&A (7)

Small Group Meeting Q&A (7). Written on August 25, 2018

Question seven: Over the past six months, why have stocks fluctuated so sharply? Is there a special reason, or is it the U.S.-China trade issue?

Answer:

If you ask me why the market has fluctuated over the past few months or past few years, as long as it is short-term market volatility, it is impossible to find the reason. I also cannot know what the reason is. But analysts and news reports will always make up some reasons. You can listen to that kind of sharing or reporting if you want, and it is also fine not to listen.

The market is originally made up of two components: volatility and the value line.

The value line is the curve based on the growth in value of all companies. This curve is usually smooth, because the value growth accumulated every day and every month is a continuous curve.

Short-term market volatility comes from the psychological states of thousands, tens of thousands, or millions of investors. If you want to analyze why the market rises or falls in the short term, you would have to analyze these millions of people, asking every seller why they sold and every buyer why they bought. That is an impossible task. So knowing how to trade the market in the short term is a fantasy. Even a god could not do it, so do not claim that it can be done. Many analysts or reports in the market give a pile of reasons. In summary, it is nonsense.