August Update – Week 3

August 20, 2020

Let’s take a different perspective on the market this week instead of the usual references to sideways moving Kangaroos.

Looking at the COVID cases trending down, we were curious to see what the infection rate (growth in cases) looked like superimposed on the ASX 200 chart from March 2020 to today.

Here it is.

Rate of cases go up, market goes down, cases start falling, market recovers.

Is it correlation, causation or something else?

We think it’s interesting albeit not something to read too much into. There are many more factors at play and it’s too simplistic to pin the market’s movements on one variable.

It does add credence to the theory that markets are generally forward looking, anticipating the worst before it eventuates. People expecting the worst is something already priced in.

This is also because of what ‘the market’ really is, covered in our recent article for members.

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