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A few years ago we first experienced a “lightning bolt” which is then followed by an “incredibly strong recovery,” writes Alexander Gustafsson under the headline “Reflections of a Historic Stock Year.”
The price drop that began in March reflected fear and uncertainty about the future as the world faced a rapid and unlikely pandemic. And the decline was brutal and, according to Alexander Gustafsson, “it has rarely gone down as fast as in March.”
“Strange development of the stock market”
The evolution of the stock market in the latter part of 2020 is strange, and Gustafsson wonders on the blog if the near-perfect V-shaped recovery has really been justified, given that the real economy is “on its knees”, while the Hospitals at breaking point are full of covid-19. patients and unemployment are at a higher level than normal.
Although several different vaccines are about to be approved and vaccines have already started in many countries, Alexander Gustafsson wonders if this year’s stock market rally is really reasonable.
Then he gives the answer directly: yes, after all, it is a reasonable increase, because the stock market “is good at reflecting the cross section of the overall picture of the future of the investor group.”
“Optimistic glasses”
Right now, this group of investors is wearing their “bullish glasses” and, with them, the news of the stock market is judged positive. The firecracker, however, follows immediately; In other words, it should not be forgotten that precisely these glasses can be quickly replaced by “more pessimistic lenses”.
When and if this happens, it is very possible that we will feel again the uncertainty to which we were exposed during the recession at the end of October this year.
Warns of increased risk taking
This is why Alexander Gustafsson sends a warning on the Nordnet blog, where he also asks for humility, not least because many investors performed quite well during the year, and some have “earned even more.”
“Now it’s easy to increase risk-taking in the pursuit of even higher returns. All I want to send is trying to keep both feet on the ground. Those who gape after a long time often lose the whole piece, ”he writes.
