RE:RE:What's is already baked into the market and what isn't?Looking for information and opinions nowadays is like trying to drink from a firehose. I value the well thought opinions and info presented here on this board to consider and make my own decisions. It forces me to look both ways before crossing the street.
With so many narratives at play, it is hard to choose which one is right, and often it is neither.
A main thing I have found is to watch what they do, not what they say. Drill down to look for facts.
We are being lied to with so many things now, and I'm not a conspiriy theorist. Propaganda is thick. For example, what is really happening regarding Russia/Ukraine. Both sides are doing horrible things and atrocities to civilians. War is hell. Keep an open mind regarding everything.
Nobody can predict short term moves, other than technical traders, but a longer term strategy may be utilized extrapolating the lines to take advantage of present and continuing fundamentals and conditions that support it.
Experienced wrote: Funny you should post about this. Yesterday, I was too busy to post but was thinking of starting thread on whether the market still "thinks" six months in advance as is the longstanding mantra by people on Wall Street.
IMO the jury is still out as to whether this is really true or just an "Urban Legend".
Here are my thoughts for what it is worth.....
THE PAST
1....when I first started investing a long time ago, this adage may have been true. There were no day traders since the transaction costs were large; the difference between the bid and ask was 12.5 cents not .005 cents as it is today
2...getting information as a retail investor was a time consuming thing. There was no internet. If you wanted to know what was going at a company you called your broker. The broker may call you back later in the day if you were a big customer. When you did get the call back and asked your question, the usual reply was, "I will wire the research department and get back to you" and you usually had to wait at least another day to get your anwer (sometimes longer)
3....programmed trading was in its infancy. Supercomputers were slower than your phone is today and had much less memory and limited multiprocessing capacity
4....a heavy trading day on the TSE was 5-10 million shares (now - SU alone trades that in a single day)
5...mutual funds were in their infancy and ETFs didn't exist
6...the TSE had strict lisitng requirements and so by and large most of the companies listed were established companies. The Canadian "casino" was the VSE.
With these considerations, people generally had to take a longer view of their investments. So while I was never sure where the "six month legend" came from, I didn't doubt that people investing had to take a longer term view of what they were invested in. The risks were too high to do otherwise.
NOW
1...pretty much everything has changed. The market is dominated by programmed trading which use mathematical formulas and game theory to make trading decisions. Trading floors are dominated by mathematicians and physists and psychology PHDs as opposed to economists and business people.
2....while brokerage firms were always sales organizations (not investment advisors), they are even more dominated by sales people. Talking heads on TV and in the news are there not because they actually really know anything but because they are good communicators and look good on TV.
3...people have access to many views of the market that are often conflicting. On this Board - who will be right on their longer term view of oil prices? - me or Migraine (for the people invested in SU I hope Migraine is right!). In this environment it is hard to make a long term decision and price assets accordingly.
3...if the market really took a long term view of valuations, then it would be hard to explain the large day to day fluctuations in the market. What long term thing changed for the market to go up one per cent one day and down one per cent the next?
4.....with trading costs down and information available to retail investors in real time, there are more day traders than there were a long time ago. Day traders, by their name, do not consider what might happen in six months....it is more like six minutes
So when you put all this together, it is difficult to say what future events are actually discounted in the market. My own personal view is not much but that is just me. Over the years, I became very skeptical about what so-called experts had to say and educated myself and built my own toolbox to make decisions and to live or die by my own sword. But that is just me. Others will certainly have a different view or don't have the time to do the necessary work and that is fine.
So Obscure, after all that hot air (so to speak), the short answer to your question is I don't think the market has discounted future interest rate hikes and the effect of higher energy prices on inflation and real incomes.