The balloon exploded, the balloon burst: what's happening to the capital market?

In recent weeks we have witnessed sharp declines in the stock markets, with technology stocks leading the trend.

What does this mean, and most importantly: what should you do?

Eldad Tamir

26/01/2022

Wednesday, 26 January 2022, 09:17 Updated: 09:48

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January caused the stock markets to fall and the value of quite a few stocks that were considered success stories to shrink. Some say "fix", others warn "bubble", but what is really going on here?

First of all, a little background: stock markets go up and down - and that's the nature of markets. It should be remembered that short-term fluctuations do not really have investment significance and that on an average of a hundred years the stock markets rise on average about 6-8 percent per year.

In retrospect an increase or decrease can always be explained for one reason or another. Most often, the main explanation for sharp rises and / or sharp falls lies in two leading human factors: fear and greed, that is, fear and greed.

In recent years we have witnessed new patterns of behavior in the capital markets. These patterns prevent emotional investing behavior at higher intensities than ever before. Every boy and girl with a mobile phone and investment advisor on Instagram become investors, without professional knowledge and without basic understanding.

Digitization as part of the digital economy is a blessing for humanity, but let us not forget the negative aspects as well.

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A bit of proportion: The negative return of January 2022 versus the multi-year returns (Photo: Walla !, no)

The current wave of fear

A little about the current wave of fear:

If you ask a hundred people why the market is going down sharply, you will get about a hundred explanations that are not really true.

It is true that the interest rate in the world in an upward trend and in the financial theory of the rise in interest rates has a negative effect on the value of fast-growing companies.

At the same time the rise in interest rates is the result of a very healthy economy.

What is better for the stock market?

A healthy economy and normal interest rates or an economy in crisis and low interest rates?

Undoubtedly the first situation is much better.

So before you join the hysterical audience and sell everything from everything, take a good good look at this table.

Eldad Tamir, CEO and Founder of Tamir Fishman Investments (Photo: Ray Oz)

What really matters

The investment significance for investment portfolios, provident funds, mutual funds, portfolio management is marginal if at all.

So to the cowards among us I say do not make a change, and to the brave I say - it is time to increase exposure to stocks.

The bubbles burst - nothing sharpens the mind more than the guilliutine.

Many balloons have sprung up in the world and in Israel: spac companies, crypto companies, unicorns and other names blown up in English.

Worth billions for businesses without sales, options for workers like the amount of water in the Mediterranean, ostentatious parties and unbearable arrogance was and still is a part of being.

But as in the children's story, an act in five balloons: "This is the end of every balloon" and this balloon also explodes - and it's good that way.

I am a huge believer in the digital economy, in technology and medical stocks but a small believer in the wind and ringers and burgers flying in the sky straight into the mouth of a high-tech worker.

When the markets go down and the air in bubbles comes out and it explodes, there is a chance that the Israeli high-tech industry will return to a healthier, more modest, more real path.

A track where things are really hard and need to add real value in hard work sweat and tears, just like any in any other industry.

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• Wall Street

• stock

• Capital Market

• Tamir Fishman

• Eldad Tamir