If we have learned anything from bull markets and bear markets, it is this: neither of them lasts indefinitely. This facts precipitating the global financial crisis of 2008 were covered in the financial press, ad-nauseam. Markets are cyclical in nature, they follow trends and there are often obvious or obscure signs about which way things are going to move. Does this mean that there is a way to anticipate with 100% accuracy which way a stock, commodity, index or currency pair is going to move? Absolutely not. However, it’s not about absolutes as much as it is about general trends.
Long-Term Appreciation of Financial Assets or Short-Term Gains?
Whenever discussion of the stock market comes up, most every trader or investor thinks about the long-term appreciation of an underlying financial asset. Traditional thinking dictates that you invest a certain amount of capital in a stock, currency, commodity or index and you wait for that underlying asset to appreciate over a given period of time. All the while, you are subject to the rules and regulations, costs and commissions, and hierarchical structure of the brokerage that you’re trading with. Oftentimes there will be costs per trade, monthly management fees, commissions and so forth. These cost considerations are important to bear in mind especially if you’re trading on a limited budget – which most people are in today’s times.
When the global economy was shaken to its core in 2008, investors were sent scrambling for cover. Trillions of dollars were erased from global markets in short order, and the declines were so cataclysmic that they sent emerging markets into a recession, precipitated steep depreciation of currencies like the South African rand, the Turkish lira, the Brazilian real, the Venezuelan bolivar, the Malaysian ringgit, and the Russian ruble. The impact of the collapse of Lehman Brothers on Wall Street or Fannie Mae and Freddie Mac had cataclysmic repercussions on markets from New York to London, Paris, Moscow, Tokyo, Johannesburg, São Paulo, Bogotá and beyond.
