China’s market crashed down by 9% and all the markets have responded by a decline, though not as sharp as China’s decline. I have read the local news and the amount of nonsense that is written is amazing.
The usual “Oh it was expected!” and the “It is healthy for the market to decline”. Nothing more upsets me than the word healthy when it comes to the markets. If this is healthy, what is ill? Moreover, I have never seen in the economic literature what is a healthy market.
The media of course took the opportunity to take the side of the doomsday scenario. Talking about how the markets are going to crash and causing general panic. These are the finest hours of the doomsday scenarion guys! I have yet though found in the media one explanation of why the decline of the Chienese market affected the Israeli market. For those who are interested why, check my post called “Efficient Market Hypothesis”, about how price reflects FUTURE expectation.
It’s interesting to see how this develops but I’m guessing a plausible scenario could go like this: General public panics and gets out of the market. Market loses some value and than rallies back up. Public pays more to get back in the market after he lost all the rally up. That’s how it always plays out for the public sadly.
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