9 lessons from the 2015 global stock market: markets have nothing to do with the economy

9 lessons from the 2015 global stock market: markets have nothing to do with the economy

Published on: 2015-12-22

Bull and bear sculptures symbolizing bull and bear markets outside the Frankfurt Stock Exchange in Germany. (Reuters)


Reference News Network reported on December 21 that the British "Daily Telegraph" website published on December 20, "Although it was an disorderly year, but the world stock market returned to its starting point" by Tom Stevenson.

The article said that if you fell asleep in front of the Bloomberg market display a year ago and woke up today, you might think that nothing has happened in the past 12 months.

Greece, China, the Federal Reserve, the British elections-what are the consequences of all this? The Morgan Stanley Capital International World Index suddenly returned to its level in December 2014.

The article said, of course, this does not really represent the story of 2015. This is a very dramatic year. The stock market has gone through a roundabout and turbulent road, and finally returned to their starting point. The average index masks a large number of rising and falling stocks. So what have we learned from this?

First, choosing the right industry and stock is critical. After a long period of simultaneous ups and downs in most investments, wealth has split. Several simple choices in January determine whether you make money or lose money in 2015. The first decision is to avoid any investment related to commodities. Anglo American, Glencore, BHP Billiton and Antofagasta are the four worst performing stocks in the UK stock market this year (down nearly 60% on average), Among the 10 worst-performing stocks are Rio Tinto and Shell.

This leads to the second lesson of 2015: Economic behavior that was originally considered to be rational was in fact irrational. It should be logical for these commodity producers to stop mining this year.

The article states that in a market characterized by excess supply and insufficient demand, the obvious solution seems to be to digest capacity, but this is not the way the market works.

The stubborn desire to squeeze out less efficient production companies out of the bureau has caused heavy losses to shareholders. The same story is happening in the oil industry: In this industry, OPEC, led by Saudi Arabia, has paid an outrageous price to maintain market share.

At the other end of the list, home builders Taylor-Wmpey, Bonray and Berkeley have all been among the top 10 gainers. Therefore, the third lesson is to adapt to the trend.

According to the article, the shares of the three housing construction companies have risen 2 to 5 times in the past four years. Despite their long-term outstanding performance, they are still up by more than 40% this year. It's not just momentum trading-these builders' profits and dividends have skyrocketed, driving stock valuations all the way up.

Fourth lesson: The stock doesn't know the cost you pay for it. Or, as economist John Maynard Keynes said, "When the facts change, I change my mind."

Fifth lesson is difficult to reverse investment. In the long run, buying cheap "value" stocks will yield the best return on investment. However, this year's approach to gains is to follow the flow.

According to the article, in a low-growth, low-interest-rate environment, growth and income should be highly valued, but people are rushing to buy and hold revalued stocks. Investing in growth stocks for £ 100 this year will earn a gain of £ 10. Investing in value stocks with the same money will lose £ 10.

This brings us to the sixth lesson: The market will only focus on one concept at a time. Investors were beset by Greece for a while, then China, then the Federal Reserve. These three questions are real themes throughout the year, but at a certain time, each question is either extremely important or irrelevant.

The seventh lesson is that markets and economies are almost completely unrelated. The bubble in China's stock market skyrocketed in the first half of 2015, despite solid evidence that China's economy is slowing rapidly. The UK's strong economic recovery has been ignored by the stock market. Our economy is growing faster than other developed countries, but the FTSE 100 Index, which is completely unrepresentative, is still falling.

The eighth lesson is: The stock market motto either works or doesn't work. If the spectacular "Santa Rising Wave" does not occur in the next two weeks, the January effect will be blown out this year. The stock rose in the first month of this year, but failed to make persistent efforts to achieve a full-year rise. but, The motto of "Clearance and Exit in May" is quite effective this year. If you sold out stocks and spent the summer on the beach, you would love 2015.

The last lesson is: Although history will not be completely repeated, it will certainly have the same rhyme. Disturbingly, Three aspects of the market this year look very similar to the end of previous bull markets.

According to the article, mergers have regained popularity, and the total value of M & A agreements in 2015 exceeded the previous peak in 2007; Corporate leverage has skyrocketed; the market has been driven by fewer and fewer companies. The narrowing of the market-leading sector is a unique phenomenon when the bull market is getting thinner.

Therefore, in addition to the hints given by the global stock market closing this year, there are many other problems.


Update the following on March 20, 2020:

Now that many assets are already extremely risky, we should set our sights on emerging global asset allocations. Looking at the world, the digital currency market also has extremely high investment value in the new investment market. With 3.12 Bitcoin Massacre, Investors are advised to pay attention to   global digital currency trading at the   NabobTradeEX exchangeBitcoin's market has increased 20 times from 2015 to 2019, and some digital currencies have increased hundreds of times. This will be a very large wave of wealth appreciation. Bitcoin mining cost is more than 1,000 dollars. Now is the best time to invest in digital currencies. Investors should start asset allocation on the NabobTradeEX exchange immediately to keep up with this wave of wealth growth.

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