Someone explain the market mentality that every time someone throws out the word inflation, the markets drop by like 20%?
If I'm a giant hedge fund and I sell off a gazillion stocks and coins, then those assets are converted to cash. Which is currently an inflationary fiat currency. Why wouldn't I want to just keep my holdings invested in something that's subject to less inflation or even deflation? Is this a bunch of tax-related sleight of hand? I don't get it.
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A few things:
What makes you think HFs are the ones selling?
Why do you think the only option is equities or cash? And with that, what makes you think equities would outperform cash (even if there is significant inflation)?
What makes you think the only option is hold long (you can be short)?
Then you have the timing question (do people care about the next hour? Day? Week? Month? Etc)
I get most of your points but why does hfs not being the only ones selling support your point? Also, when has cash out performed equities?
Lastly, what do you mean with your last paragraph?
My only point about it being HFs or not, is that your post starts off with that assumption (and then discusses the intentions of the fund). So if HFs aren’t selling (but let’s say others are), would you have the same reasoning (cash vs equities)?
As for when cash has outperformed equities, well it ties into my last point. Cash outperformed equities during the financial crisis, cash has outperformed equities in 2022, etc. It depends on what time period you are measuring things over and what your motivations are as an investor. HFs will move in and out of stocks much more than the average person (and as I said, will also go short stocks), so they aren’t thinking about inflation vs equities over the long term, but rather how are markets going to move in the near term (and how to make money off of that).
this year
Didn't a number just come out that stated that HFs are at the biggest all-time net short position? Like short $100b?
Edit: Yep - https://www.cnbc.com/2022/08/18/hedge-funds-are-sitting-on-a-record-lev…
What point is this making?
what makes you think this what makes you think that
how about you think of getting some bitches
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Thanks for this! How can the fed backstop the markets?
You’re saying people have invested in equities and they’ve continuously surged because they were confident that if shit hit the fan, the fed would protect them? How????
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Seeing your grocery bill rise week over week to ultimately hit an increase of 50% within a year is a bad sign. This means a lot of people end up having to make cuts which can impact revenue for a lot of firms. This also puts pressure on employees to ask for pay increases or leave for more money. Both of these are negative as far as earnings are concerned. Couple in rising rates to combat said inflation as the yield curve starts flattening and eventually inverting then you’re left with nothing but bear flags.
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