Key insights
- The author argues that the current market rebound is driven by long-term investors who believe current geopolitical events, like the Iran situation, will have minimal impact on the market in the long run. They cite the 2022 bear market triggered by the Russia-Ukraine war as an example of a significant event that ultimately had a limited long-term impact on the market. This perspective suggests a moderately bullish outlook for equities.
So many people are in disbelief that the market is rebounding. Everyone needs to remember that the stock market is NOT a reflection of current economic conditions. It’s is not even a reflection of near term economic conditions. Most retail and institutional buying is from people with long term, 10/20/30 year time horizons. And they’re buying because they don’t believe this Iran fiasco will matter in a few years.
Does anyone remember that the stock market fell 20% and entered a bear market in 2022 when Russia invaded Ukraine? Russia produced 12% of the world’s oil and 30% of Europe’s oil and suddenly it became toxic.
The market is currently 47% above what the top was BEFORE that bear market. In 4 short years literally none of it mattered, to the point where people forget it even happened.
It’s not stupid to be buying stocks now.