If you’ve been through high school you’ve learned about U.S history class at some point. But could you say you’ve truly lived through it? As of today, everyone can say yes to that question, because on January 6th, 2021 hundreds of protesters pushed through barriers set up along the perimeter of the Capitol and even broke inside. Sadly, one woman died in the process and damage was done.
With an event of such magnitude many investors were expecting a negative reaction from the stock market. But as you may know, predicting the stock market is very difficult and markets are not rational. And as a result, the stock market did exactly the opposite, with stocks rising strongly on Thursday. Behind this rise is a hope that the Democrat-controlled Congress will enact further stimulus that will boost cyclical sectors of the market. But how could markets ignore the bad so easily yet take in the good equally as easily?
Well, according to Mike Santoli from CNBC. “Ignoring civic unrest, and intra-government conflict isn’t new. The markets are mercenary about keeping a focus on only what ultimately matters in valuing future cash flows. If the Capitol incursion had left the result of the Electoral College count in genuine doubt, maybe the market does more. But the events have arguably moved more elected officials to condemn the election-denial efforts than to endorse them.” Essentially, investors don’t really look at what’s happening in the moment. They prefer to look at what the news could bring for the companies they invest in, or the economy long-term results. Do you agree with Mike?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.