Wall Street has turned panic into muscle memory
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Investors have learned to treat shocks as invitations. Covid, inflation, rising bond yields and now the Iran war all knocked the S&P 500 lower, but each sell off was followed by another rush back into equities. The index has even climbed above 7,000 for the first time.
That confidence is not purely delusional. Corporate earnings have kept rising, and analysts now expect S&P 500 profits over the next year to grow by 18%, up from 15% a few months ago.
The danger is that resilience can become reflex. Buying the dip works until the dip is not temporary. If earnings falter, or war and oil prices start damaging margins, the habit that has rewarded investors for years could become the market’s most expensive superstition.
Source: Financial Times
A market that rebounds from every shock can look invincible. A country with rising exports can look transformed. A company spending billions on the future can look visionary. But every one of those stories depends on assumptions that can change quickly.
That is why the details matter. The world is not becoming less risky. It is becoming better at shifting risk around until someone else is holding it.
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