Thread by @MirMAKOfficial

Why The World Capital Markets Will Not Recover To Their Past Highs

A THREAD

1. Markets work on 2 things. Earnings and anticipation of earnings. Good anticipation begets good results and bad begets bad. Many other things being variable.

2. Another thing that matters as well

is Monetary Policy and Liquidity injection by governments in bad times.

3. American markets being the largest ones in the world lead the way for other markets in most cases. Not all but many. Specially the European markets follow suit of Dow.

4. Chinese markets of late have

Also become interdependent to a major extent because of the globalisation of the past 20 years and American MNC earnings of about $2.7 trillion of imports into China.

5. When the market is in a euphoric state, bulls are in control and bulls at times become exuberant

Albeit irrationally. Greed is the most logic defying emotion when it comes to the capital markets. But when euphoria ends, and greed is replaced by fear, it acts more powerful than the greed. Fear of loss is more powerful than the anticipation of gains.

6. Markets can

Take a year to gain momentum and can give back all the gains in a few days to a week. Imagine a room full of people and someone scrams FIRE and there is only one exit door. Of course everyone is going to run towards the door and stampede will happen. Many will fall and

Many will die. Stock market is that room and someone has screamed fire right now and people are seeing flames. That someone is a culprit called #CoronaVirus.

7. Shares go up because investors anticipate earnings to be good in the future. But when a pandemic happens

Earnings go down. When a world pandemic happens specially in such an interconnect global economy, earnings get affected across the bard. In every country.

8. Under normal circumstances a bad event happens, people get shocked, recover from the shock, forget about that event

And jump back into the market because greed comes in again.

9. A virus like corona is not a shock. It is a slow but solid reality. A reality that will wipe out $4 trillion from the global GDP. And this is an initial estimate.

10. Companies in the next quarter and the

Quarter after that will suffer immense slow down in their revenues and profits. #Apple to #Tesla to mining companies to #EXXON. A slow down in future revenues means a lower stock price. A slow down in global economy for 6 to 8 months means a disaster for the

Stock markets.

11. Greed is no longer a trigger. Fear is the king. And fear based on reality. An unknown reality whose extent is not known. How bad can things get ? Nobody knows.

12. An interest rate cut in EU has not helped either. When IR cuts do not stimulate a market

Then you can rest assured that investors are panicking.

13. One man’s’ panic in the market SOMETIMES is another man’s fortune. But when all men are panicking then it is nobody’s fortune.

14. This market is not going to rebound anytime soon to its previous levels.

15. This is real. Dow Jones has lost all its gains that it made in Trump’s Presidency. 80% of it in a month. That is a telling tale it the future to come.

16. On top of a slow down in the commodities market. Interest rates already at the lows in most countries. Earnings

With a bleak future. Severity of the virus still a guess for everyone. Recession looking in the face of the world. Earnings slow down like never seen in the past 11 years. All countries panicking together.

IT WAS A RECIPE FOR DISASTER and the disaster has occurred.

These markets are not turning to its previous highs anytime soon. This is not a bargain hunting time... its time to run towards the exit door.