{"id":55758,"date":"2014-08-11T02:45:16","date_gmt":"2014-08-11T06:45:16","guid":{"rendered":"http:\/\/countingpips.com\/?p=55758"},"modified":"2014-08-11T02:45:16","modified_gmt":"2014-08-11T06:45:16","slug":"if-markets-coped-with-this-scare-they-can-cope-with-anything","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2014\/08\/if-markets-coped-with-this-scare-they-can-cope-with-anything\/","title":{"rendered":"If Markets Coped With This Scare, They Can Cope With Anything\u2026"},"content":{"rendered":"
August 11, 2014<\/div>
\r\n<\/div><\/div>

By MoneyMorning.com.au<\/u><\/a><\/p>\n

Ebola. Russia. Ukraine. Iraq.<\/p>\n

When the market <\/strong>needs an excuse to fall it often finds an excuse.<\/p>\n

Investors have had no shortage of things to choose from as a reason to sell.<\/p>\n

We like the Ebola story. It’s not the first time the threat of a major disease has smacked about the market<\/a>.<\/p>\n

You must remember bird flu and swine flu.<\/p>

\r\n
\r\n

Free Reports:<\/p><\/div>\r\n

\r\n

<\/a>\r\n\t Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p>

\r\n
\r\n
\r\n

<\/a>\r\n\t Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p>

\r\n<\/div>\r\n

\r\n
<\/div>\n

Each time the market goes into a panic. The stock with the supposed ‘miracle cure’ soars. Then it crashes just as fast as it soared. Biota Holdings [ASX:BTA]<\/strong> shareholders will know what we’re talking about.<\/p>\n

At first glance this kind of fear and calm cycle may seem like a good thing. After all, it keeps investors on their toes. But the reality is the opposite.<\/p>\n

Each time a threat appears and disappears without it makes it more likely investors won’t notice the real threat when it comes.<\/p>\n

And that will<\/em> be a disaster…<\/p>\n

You’ve heard the story, The Boy Who Cried Wolf<\/em>.<\/p>\n

It’s an old tale. A boy looks after the village’s sheep.<\/p>\n

But he keeps running to the villagers telling them a wolf is attacking the sheep. They rush to see, only to find out the boy has lied.<\/p>\n

This happens time and again. Eventually, when a wolf does attack the sheep, the boy runs to tell the villagers, only this time they don’t believe him.<\/p>\n

The moral of the story is obviously to not tell lies.<\/p>\n

Now, we’re not suggesting that people warning about the threats facing the market are deliberately lying. What we’re saying is that repeated calls about a market crash become gradually less helpful to investors. It’s desensitising.<\/p>\n

For the simple reason that for all the claims about crashes since 2009, not a single crash has led to a market meltdown. In fact, today US markets are trading near record highs, and the Aussie market is trading near a six-year high<\/em>.<\/p>\n

How can that be?<\/p>\n<\/p>\n

People are a resilient bunch<\/h2>\n<\/p>\n

For one thing, it has become clear that the crises the mainstream has highlighted and which the market has feared have turned out to be anything but crises.<\/p>\n

That doesn’t surprise us.<\/p>\n

We’ve explained this before. Having failed to spot the disaster that happened in 2008, the mainstream is now going for the scattergun approach.<\/p>\n

If it predicts enough crises, it’s bound to get one right. Only it won’t. Because the mainstream still doesn’t understand why the last<\/em> crisis happened. Until those in the mainstream understand that, they haven’t got a chance of picking the next real crisis.<\/p>\n

But that’s not the only reason. There’s something else.<\/p>\n

We’ll try not to get too philosophical here, but if history has taught us anything it’s that people are resilient.<\/p>\n

Resilient enough to survive wars, famines, global warming, global cooling, diseases and goodness knows what else.<\/p>\n

The great thing about people is the urge and the desire to make the best out of even the most dire situations.<\/p>\n

It’s that kind of mentality that makes business and financial markets<\/a> so exciting. You can see it everywhere in the market today. A seemingly insurmountable obstacle crops up somewhere in the economy <\/a>and before you know it an entrepreneur<\/a> has come up with a solution to get over the problem…or at least profit from it while supplying a product or service.<\/p>\n

We see that happening all the time in the small-cap market<\/a>. Tiny companies appear with a new idea, and the belief that they can change the market<\/a>.<\/p>\n

The fact is that as bad as things may seem, there is always<\/u> an opportunity…even in the most unlikely of times and places.<\/p>\n

Don’t sell, hang in there and buy more<\/h2>\n<\/p>\n

One of the things that has the market on edge is the fear of war.<\/p>\n

We’ve tried to explain that from a business and markets perspective (that’s what this eletter is all about, so don’t criticise us for taking that angle) wars and conflict don’t necessarily mean bad news for stocks.<\/p>\n

So while most folks have told you to sell your stocks <\/a>because of Iraq and Ukraine, we’ve put our neck on the line by going against the crowd. We’ve told you to hang on to your stocks.<\/p>\n

We’ve even suggested that you buy more<\/em> stocks.<\/p>\n

Because after all, if entrepreneurs could make the best of a bad situation during one of the worst wars in history, it goes to show that the markets really don’t have much to worry about today.<\/p>\n

Gramophones in the trenches<\/h2>\n<\/p>\n

A new book profiled in The Atlantic<\/em> magazine relates how businesses tailored their advertising and products to cater to the demands of the First World War.<\/p>\n

The article notes:<\/p>\n

\n

‘“During the First World War, advertisers seemed to be responding to people’s needs relatively quickly,” <\/em>[author, Amanda-Jane] Doran says. “In Country Life, one of the things I noticed, being a woman, was that there were a lot of ads for guard dogs. It’s things like that that start appearing throughout the war—obvious and terribly poignant things, such as identity bracelets—that start to be advertised very widely, as casualty lists mounted.”<\/em>’<\/p>\n<\/blockquote>\n

Even in the face of war there is demand for goods and services. In this case guard dogs to protect homes while the men were away, and identity bracelets to ensure a soldier’s body would be recovered. The article says other goods grew in demand such as trench coats (literally for the trenches), and gramophones to send to the lads in the trenches for entertainment.<\/p>\n

The point we’re making here (in fact, the point we’ve made for the past two years) is that when the market crash comes it will be due to a big event…a huge event.<\/p>\n

It will be something that causes the monetary system to seize up. It will be something that throws millions of people out of work.<\/p>\n

It will cause interest rates to plunge and then skyrocket. It will cause businesses to stop investing in their businesses, and it will cause the banks to turn off the lending spigot.<\/p>\n

That has to be a big event.<\/p>\n

It has to be an event on a par, or perhaps even worse than the 2008 meltdown.<\/p>\n

That’s the magnitude of the event that will cause markets to crash. But even then a meltdown creates opportunities, as we found out in 2009 when stocks traded for crazy-cheap valuations<\/a>.<\/p>\n

One thing is for certain. The market won’t crash because of Ebola…Ukraine…Iraq, or any other blown-out-of-proportion event beaten up by the mainstream.<\/p>\n

So, until we foresee an event of that scale we’ll keep doing what we’ve done for most of the past five years since markets started to recover — we’ll use the mainstream scare tactics to buy stocks on the cheap from those fleeing the market in panic.<\/p>\n

Cheers,
\n Kris+<\/a><\/strong><\/p>\n

\nJoin Money Morning on Google+ <\/u><\/a><\/strong><\/p>\n

The post If Markets Coped With This Scare, They Can Cope With Anything\u2026<\/a> appeared first on Stock Market News, Finance and Investments | Money Morning Australia<\/a>.<\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\nBy MoneyMorning.com.au<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au Ebola. Russia. Ukraine. Iraq. When the market needs an excuse to fall it often finds an excuse. Investors have had no shortage of things to choose from as a reason to sell. We like the Ebola story. It’s not the first time the threat of a major disease has smacked about the market. […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-55758","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/55758","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=55758"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/55758\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=55758"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=55758"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=55758"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}