Mark Cuban made a post on his weblog titled The Stock Market: The New Normal where he discusses that this might not be just another downturn. Times, as he points out, are different. There haven’t always been this many mutual funds, hedge funds, etc. competing for your money. There haven’t always been this much coverage and information available all over the place (tv, internet, etc.). Have we reached a situation where no one wants to go long or short? Is this the new normal?

I’m no expert, but my guess is that, yes, these are different times. But the nature of markets is that there is always going to be a buyer if the price is right. So what is the right price? Fundamentals play a role in finding out the right price. But there’s more to it. Psychology. Psychology is the reason why you can never predict a market. How is the negative spiral going to be broken? My guess is that after a year or so of downsizing we will reach a point where the profits provide the confidence a buyer needs. Then it’s time to ride the trend and bet on a bull market.

I think the American economy is also starting to really get a feel of the effects of China and other emerging markets. Times will get tougher. This is of course adding to the situation.

Mark Cuban (born July 31, 1958 in Pittsburgh) ^[1] is an American billionaire entrepreneur ^[2]. He is the owner of the Dallas Mavericks, an NBA basketball team ^[3], and Chairman of HDNet, an HDTV cable network ^[4]. Source: Wikipedia

Tags: economy, mark cuban, the stock market

This entry was posted on Friday, October 31st, 2008 at 7:58 pm and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.