Did it? I really can't wrap my head around trying to reconcile what the people who know about this stuff say and what the numbers on page seem to say. I'm just not smart enough. I know I'm not the brightest bulb in the box, but I've been trying to figure out the real impact of all this on the market and it honestly seems to be really minimal. Yes, it's trending down and recession seems likely and a couple days had really big drops this month - but it's nowhere near even its average, never mind its lows from the past 2 or 3 year periods. Just 3 years ago the market was at like 28,000 points. It doubled in 3 years and now that its shrinking a bit, that is a crisis? What do I not get?
This isn't so much the market "plummeting" as it looks like to me a massive bubble bursting that was based on nothing to begin with.
But then, I'm the guy who thinks "The Big Short" was a smart movie. I'll freely admit I'm a fucking moron who knows nothing about finance.
Right, and I can see that. But if you back out that line graph over a longer period of time, this dip would be miniscule compared to the overall upward trajectory. If the Y Axis tracking the market starts at 0 (which it wouldn't I get that, but go with me here) and the X axis tracks time and we set it to say, a 3 year period - then the result is that the line has exploded upwards. The tiny tip at the end which represents the last 6 months barely registers. The average closing price in 2023 was 34,121. The close today was 42,454. So even if the market has dropped significantly in the last few months - it's 25% higher than it was 2 years ago.
Again, I trust that people know what they're talking about. I am certain I do NOT know what I'm talking about. I am not saying I don't believe them, or that I'm right - I just want someone to explain the factor I'm missing. I have theories, but no way to confirm them because I lack the base knowledge to even phrase the question right.
Is the stock market supposed to have a "default growth" element that we have to account for? Like, is the fact that the market twice as high as it was 3 years ago an illusion because constant growth is just a necessary element of the market functioning at all? Does that default growth make longer timelines less useful as comparative tools?
Or is it that more that the market was projected to grow and then shrunk instead, so the relevant comparison isn't to history, but to projections, which is why even a small dip seems more catastrophic? Because it was supposed to continue skyrocketing.
Or am I asking the impossible? Does gaining context for the larger momentum of the stock market take a degree in finance and by asking for someone for a simple explanation I'm just further showing my ignorance?