Beware of the usual alarmist headlines bringing up the Lehman Brothers case because we are in August, with reduced trading, and the markets have already shown resilience in recent years
This is not the first time that there has been a heavy sell-off in global stock markets in the month of August. And it probably won’t be the last. But to contextualize the market moment, we must start with the first – and seemingly holy – consideration. We are in the month of August and all Bags travel to trade decreased, with markets defined by experts as “thin”. What does this mean? Simple, that the movements that do not make sense in quantity (in this case sales) are magnified, because they have a greater percentage effect.
WE ARE NOT FACED WITH HUGE SHORTS
Be careful, we’re not saying that there are no downsides, or (as we’ll soon see) that there are no problems. What we want to underline is that the August data should be taken with a pinch of salt. And, above all, we want to say that we are not dealing with something new Lehman Brothers, the bogeyman that many love to boast about when faced with the first market correction. So, message to sailors, we are not facing another Big Short, because Wall Street, for example, is very high at pre-Covid levels and has been breaking records for weeks. Therefore, shorts with medium length positions risk getting hurt a lot…
** This article was written by FinanceLounge