Thursday, October 16, 2014

Is the Stock Market Crashing? Hardly.

Is the stock market "crashing"?   The media seems to think so.  The chart above shows a different story.

In the news recently, a lot of panic and fear.  As I noted in a previous posting, fear sells.   CNN says the Fed is "out of ideas" and illustrates the "Wall Street Crash" with this image:

Wow!  I never realized things were so bad!  Oh, wait, this is just an effect of scale change.

You see, when you zoom the scale up by 10,000% and then CUT OFF anything below 15,000, and then limit the time scale to two days, well, you can make the market look "volatile" to anyone.  Well, anyone who doesn't understand math and graphs.   Oh, wait, that's about 99% of the United States.  I wonder who the 1%'er are.  Oh, right, the Billionaires who didn't sleep through math class.

Look at the two images above carefully.   If you look at the top image, you see a correction, albeit a minor one, taking place, after nearly five years of continued economic growth.   If you look at the bottom graph, you see the world falling apart and your portfolio being cut in half - that is, until you realize the bottom graph has been snookered to make it look worse than it is.

Is the market down a bit?  Sure, and you would expect this.  A lot of "dot com" businesses are starting to show their real side - speculative earnings, wild-eyed promises, and no real business plans.   And that brings down the market.   The Fed is easing its "quantitative easing" and interest rates may rise.   That's part of it, too.   Ebola and ISIS (or ISIL?  Make up your mind what your name is, terrorists!) - I doubt it.   Ebola is no big threat to national health and ISIS or whoever they are are only a big threat to Iraq and Syria - countries that are both already fucked beyond recognition as it is.

So why is the second graph so different than the top one?   Well, duh, bad news sells.  And if they can get you to think that the world is coming to an end, they can get you to "keep viewing".

Plebes.  So easy to lead by the nose.  I only wished I figured this out long ago, I'd be a Billionaire by now, too.