Securities Markets Revealed
Logically speaking, stocks should do well when companies are growing fast. But as a practical matter, stocks falter whenever employment figures indicate companies are hiring workers. This illogic becomes our new logic. We accept it, profess it, and enforce it.
Remember the morning of the stock market crash in ‘87? In the closing hours of trading on that fateful Monday, with fear of a recession gripping the nation, the bond market soared! Everyone else was drowning themselves in whiskey, and bond traders were uncorking champagne. Sorting out the cause-and-effect is like the old routine, "Who’s on First?"
Costello: So stocks went down because bonds went ...?