When the ‘herds get spooked,’ this is what a stock market crash could look like

Every time the market seems to be caught in a death spiral these days, buyers are quick to step up to nab the discounts. That buy-the-dip mentality has, again, been bolstered by the idea that the Fed is ready to step in with a rate cut.

“Irony of ironies: Such complacent confidence in the efficacy of central bank interventions is actually setting up a crash scenario,” he wrote on Monday. “Crashes and melt-ups are both manifestations of herd sentiment.” “Confidence in the absolute efficacy of Fed intervention breeds complacency, which is the essential backdrop of stock market crashes,” he wrote. “Crashes don’t arise from a skittish herd, they arise from a complacent herd.”The chart illustrates eight stages of Smith’s crash scenario:No sign of spooked herds on Monday, however, with the Dow DJIA, +0.34% , S&P SPX, +0.51% and Nasdaq COMP, +1.09% all logging solid gains.

Business Business Latest News, Business Business Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Trump's trade wars have cost the stock market $5 trillion and counting: Deutsche BankIn an escalated trade war with China and now Mexico, the U.S. is losing trillions of dollars in foregone U.S. equity returns, Deutsche Bank said Friday. Less money for DB to loan him again. Nonsense CNBC needs to avoid politics
Source: CNBC - 🏆 12. / 72 Read more »

These stocks may be winners as the globalization trend reversesNames like Visa, Mastercard and PayPal are well positioned in an ongoing trade war and slowing globalization, according to Morgan Stanley.
Source: CNBC - 🏆 12. / 72 Read more »