Why the stock market must go down

If you’re a normal person reading this, it is likely your diversified retirement portfolio’s nominal value declined by somewhere between 2 and 4 percent today. Maybe you didn’t bother logging in to the 401(k) provider’s website. Maybe your advisor’s login gateway is too annoying to deal with so you just haven’t bothered to check. But here it is – one of the biggest Dow Jones point declines on record, and a pretty nasty day for the S&P and Nasdaq in percentage terms too.

There are two things I want to mention, though.

The first is, this isn’t about money for the Chinese. I mean it is, but it’s more than that. Saving face is big with these people, and they weren’t going to lay down for a new round of tariffs – as decreed by the President last week – and do nothing. So today is the something – a tit-for-tat drop in the Yuan/dollar peg that effectively nullifies the effect of the additional 10% tariffs going on in early September. But wait, there’s more – Chinese state media reports they’re done buying agricultural products from our farmers too.

Sounds like they’ve had it and the gloves are now off. Not great news for the global economy, overall.

So that’s the first thing. But here’s the second thing…

Stock markets have to go down.

The US stock market must fall.

Without the threat of losses, the gains never show up.

I want you to picture a world in which stocks never went down. What multiple would you pay for the

Keep reading this article on The Reformed Brocker.

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