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-----Original Message-----
From: Ira <ist@xxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>I think a review of history will show that in all of recorded market data
that
>events never changed the direction of the markets for more then a day or
two.
>Take the Dow, the S&P or any other index and check back in time. You will
find
>that the wars, assassinations, market prognosticators Predictions of doom
or >any
>other event did not stop an up market from going up or a down market from
>continuing to fall.
I'm not so sure about that. Fear can distort a market for much longer than
a day or two. When Iraq invaded Kuwait, the price of oil jumped from $20 to
about $40 and stayed there for an extended period of time. The loss of the
Kuwaiti oil flow to the world markets didn't justify such a jump, but the
threat the Iraqis now posed to the Saudi oil fields did. Once the US air
campaign removed this fear, the price immediately dropped, even though the
actual combat continued for weeks.
The important point here is that it is the UNCERTAINTY OF THE OUTCOME of
external events that distorts markets, not the events themselves. If the
the markets knew for a fact that Clinton was going to be removed from
office, they could factor that info in and move on. The fear is in the fact
that it looks like he will be impeached and nobody knows for sure what will
happen in the senate trial. The longer such a trial takes, the longer the
fear in the US financial markets could continue.
Bruce
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