Welcome to the whipsaw world

This roller coaster ride is… perfectly normal

Hang on and don’t be alarmed. What goes up must go down, and the other way around. And it will probably happen sooner than you think; or maybe later. If you’re not confused, you obviously haven’t been paying attention!

Nowhere is this more evident than in the American stock market, as demonstrated by the S&P500 share index. After reaching an all-time high in February 2020, plummeting during the Covid pandemic, and breaching a new high point six months later, the S&P500 collapsed in 2021. But not for long; like the proverbial Phoenix, the index rose once more, and last week was at levels never seen before.

Of course, some of this super volatility is the result of a self-fulfilling prophecy. As investors increasingly aim for cyclical gains, trying to take advantage of the rapid swings from peak to trough, so the whipsaw market responds, with even greater drops and bounces. And everyone piles on the roller coaster once more.

The old investment strategy of ‘buy and hold, forever’ doesn’t work very well these days. For those looking for long term growth, there’s a distinct sense of FOMO every time the market seesaws.

Hyper connectivity is part of the problem. When POTUS tweets that he’s banning Chinese tech, everyone knows about it in the blink of an eye. Likewise when new deals are inked; the market reacts – or over-reacts – as quick as those thumbs can get the message out. Again, the old trope holds: How the market will react is obvious, but only once it’s obvious.

If you’ve invested wisely for the long term, doing nothing is probably still the best strategy; but if you’re riding the roller coaster for fun and profit, doing nothing could be the greatest risk of all!

Warning: Hazardous thinking at work

Despite appearances to the contrary, Futureworld cannot and does not predict the future. Our Mindbullets scenarios are fictitious and designed purely to explore possible futures, challenge and stimulate strategic thinking. Use these at your own risk. Any reference to actual people, entities or events is entirely allegorical. Copyright Futureworld International Limited. Reproduction or distribution permitted only with recognition of Copyright and the inclusion of this disclaimer.