At its core, TA is the study of supply and demand as expressed through price. Without needing to take an Econ 101 course, most people understand the basic idea of supply and demand. Where supply and demand meet, we arrive at what price gets paid at that moment in time for a stock, bond, commodity, etc. There are humans on both sides of the transaction, so the study of price also incorporates a lot of human behavior tendencies.

The banking system is built on trust, and things can get messy once that trust erodes. The government has taken steps to alleviate concerns about other similar banks, but nobody truly knows how this will play out, which can be unsettling. However, this is nothing like 2008 which saw our largest financial institutions with truckloads of bad loans on their books from making questionable lending decisions. This is not the first time something like this has happened, and it won’t be the last.

Gambling is in vogue right now. Thanks to the increased prevalence of online betting, bettors wagered a staggering $16 Billion on Super Bowl 57. After a rough 2022 in financial markets, investors are finding it hard to tell the difference between their 401(k) and their online sportsbook account. I cringe whenever I hear somebody say that the stock market is like a casino. Sure, the green and red numbers and the up and down arrows make it *feel* like a casino, but there is one key difference (besides free drinks): the odds are easily in your favor with your investments.

I recently saw data that said there is 100% certainty of a recession this year. In a world of probabilities, I like to avoid absolutes like that. What follows is not a prediction of what I think will happen but rather a look at the other side of the argument.

I think it is safe to say that this year is not one most people will look back on with affection. We know that, historically, roughly three out of every four years is positive in the stock market. 2019-2021 saw positive annual returns, which simplistically meant we were due this year. Of course, hindsight is 20/20, and using simple averages like that is no way to invest your money. My point is that occasionally, we need these resets to flush the system of excesses. It doesn’t make them any more fun to live through, but hopefully, we learned some valuable lessons.

Most people are aware of the basic tenets of Ivan Pavlov’s experiment with dogs. A ringing bell signaled feeding time, and after a while, the dogs would begin to salivate at the sound of a bell. From the end of the Global Financial Crisis, investors had been conditioned similarly to buy anytime the stock market fell by a meaningful amount. The more aggressive one became during these dips, the more they were rewarded in short order. This year has broken that positive feedback loop, maybe for a while.