Will Stress Come True?

in #steemleo2 months ago

Stress Test.png

This is already old news but I have had it sitting in my things to read as I have found the circumstances the economy and industries are living to be fascinating. I never thought I would live through another extreme time since the Financial Crisis over 10 years ago but this has surpassed that although the way it has worked out has been substantially different. I still recall the times of the Financial Crisis when I would wake up every morning to read the speculation of the next collapse.

However, despite the economy being magnitudes worst that that time, we just hit an all time high in most stock markets! While not all are participating as it continues to be led by the technology giants that have actually benefited from this cycle in the economy, it continues to be amazing to see some of the valuations we are seeing despite the fact that the economic conditions are probably worst that the most stressed scenarios institutions have even considered.

To add to this, I continue to read about the closing of business that had solid results and were growing and hiring the same time last year. It feels as if the markets and its participants are ignoring the bad statistics and exaggerating those that are great. I do believe that it is likely the large amounts of liquidity given the programs providing stimulus to markets, but the behavior of investors surprises me. This is further proof that markets remain irrational for extended periods of time. Also a primary reason that active trading is not for me and for many others.

My concern is that everything always reverts to the mean and the implications of this fact is scary in my opinion. The likelihood of this impacting not only our financial wellbeing due to employment and inflation, but also our social stability given the blame game that could ensue, is a reason I look to be defensive over the longer term. I am happy to have some assets in precious metals and cryptocurrencies for this but it is likely it could not be enough. The only hope is having the time to prepare.

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