One of the best assumptions an investor should respect is that he will not be able to understand certain market movements and sentiments, at least in the first instance. This is important because it is the unsubstantiated stubbornness that leads many early traders to insist on types of trading or strategies just because they think they “know more than the market” when in reality the success of an investor is directly linked to the ability to navigate to the rhythm of the market winds and not any other.
When we look at market-driving catalysts, we must also have this mindset of accepting what we do not understand, for example giving value to a Trump statement and reversing future losses, when what the US president says is almost always different from reality. Especially when we realize that his interpretation of the facts is at least peculiar. Today, for example, he assumed that the Chinese vice president’s words of wanting a peaceful resolution of the trade war, as China’s intention to give in to Trump’s claims, even stating that the delegation of the world’s second-largest economy made contact yesterday with his US approval to resume negotiations, a fact that no one on the Chinese side has confirmed, on the contrary, a major newspaper official, who knows the case, even said that there were no contacts and that China’s position remains unchanged, that is to say the statement of the Chinese vice is obvious to someone who is in conflict, wants a peaceful resolution, but nothing more.
But despite this incongruity, Wall Street is sure to hold back the gains made by Trump’s appeasing tweet, with all sectors of the S&P500 gaining value and the safe-haven assets failing to outperform. The Yen loses -0.7% to 106.08 or the biggest drop in the last two weeks. In short, do not fight the trend, but be cautious in navigating waves that do not understand at first sight, as the feeling can reverse as quickly as this morning.
Photo by Liam Macleod.
