Economy
Related: About this forumThis Stock Market is Really Sick, and Big Institutional Investors are Bailing out
This Stock Market is Really Sick, and Big Institutional Investors are Bailing out
by Wolf Richter January 25, 2016
Theyre slashing their equity allocations: BlackRock.
Stocks cant seem to rally for more than two days in a row before getting hammered down again, punishing dip-buyers with relentless regularity for doing what had worked flawlessly for years.
Todays swoon the S&P 500 and the Nasdaq dropped 1.6%, the Dow 1.3% put an end to the short-covering rally that started midday Wednesday, when the S&P 500 bounced off 1,812 and then rose 5.3% by late Friday. Draghi had given the buy signal.
By the end of the week, weary investors had returned to an old habit: looking to central banks for solace, wrote BlackRock Global Chief Investment Strategist Russ Koesterich, Monday morning before it all fell apart again.
But despite the vague promises embedded in Draghi-speak, it didnt last long. Overall, it was a puny rally compared to the brutal selloff that had started at the end of December. The S&P 500, at 1,877, is now back exactly where it had been on March 10, 2014. Despite all the drama and volatility, it has gone nowhere in nearly two years not counting anguish, fees, and taxes.
Large institutional investors are starting to figure this out too. And theyre planning to bail out of this cursed market. ......................(more)
http://wolfstreet.com/2016/01/25/this-stock-market-is-really-sick-and-big-institutional-investors-are-bailing-out/
rjsquirrel
(4,762 posts)Where does the capital go?
The US remains the strongest market and economy in the world.
golfguru
(4,987 posts)Take one example. Boeing. It was down 9% today.
But only 2% of Boeing shares traded today.
Which simply means the other 98% lost 9% value,
without moving a stick. In simpler words, the value
of their capital shrank by 9%. If they had $100,000
Boeing stock yesterday, today it is worth $91,000.
Their capital did not go anywhere. It simply SHRUNK.
rjsquirrel
(4,762 posts)The rapid destruction of capital creates new demand.
It's a cycle.
RussBLib
(8,985 posts)The high-speed traders employed by the biggest banks are still gaming the system, making tons of money on market swings while us little guys get slammed over and over.
There should be an investigation. High-speed trading should either be outlawed or taxed.
rjsquirrel
(4,762 posts)But it's not driving the volatility of the last few weeks.
Patience. It's how you make money if you don't have Insider knowledge.