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Based on investor psychology, are we due a crisis in Q4?

Based on investor psychology, are we due a crisis in Q4?

Over the last 100 years that stock analysts and psychologists have been covering markets, one constant in particular has never changed, investor psychology. In this regard, Thomas Veillet, former trader at UBS said: "Markets are run by humans, humans always make the same mistakes, mistakes are repeated in history, they will continue to do so. Stock markets experience emotional cycles continuously. Sometimes we as traders feel that a rising market will stop and stay at a particular level then suddenly all is total euphoria. We could hold forth for a long time on the subject, but the easiest way is to observe the graph below". By studying this chart, we can see that sheep tend to arrive near the end of a trend and that last bullish sequence takes shape to make them believe that they were right. Did this phase happen earlier this year with 50% rise in the DAX six months after a 6 years rise? It seems possible and even likely that the downward sequence of the end of August seems to be the denial phase, seen on the chart above. In other words, the decline this summer was perhaps not a medium-term decline in uptrend, but the beginning of the end of the long-term bullish movement... When we see that market trends are impacted by emotional cycles, it is necessary to analyse how often cycles go through. Answer: about 7 years. About every seven years, for over 40 years now, a major historical epiphenomenon, macroeconomic or political event occurs which generates a market purge, often a decline in the equity market, in which individuals come out at the low point in the doldrums while in parallel, institutional investors tend to gather up shares cheaply. Calendar of previous stock market crises, when will be the next? The following facts would support the thesis of a potential future crisis - China's slowdown, the global economic engine - Quarterly profits fell in the US for the first time in 7 years - Emerging countries crisis + currency war - higher valuation of shares in the US and Europe Conclusion: Being aware of the macroeconomic and historical environment in which we are now could potentially be very important for the preservation of your capital and trading success.


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