Stress tests

What is going on with these stress tests? Experts can find you all the pros and cons of it but my take is that these are only psychological, meant to improve the good feelings among the general public and casual investor. It is meant to catch the stock market slide which has fallen into spiral starting simply because of the bearish sentiment created during the election year. And it might just work. If consumer feels safe to spend, it will get us out of the downward spiral. And with the elections out of the way, there are no more motivated parties to foster a negative sentiment. So it might just work.

This recession is certainly a result of over-leverage in good times. I would have to look at some data to compare to 1929 depression to see how it compares. However, it is more likely that in 1929 depression, there wasn't quick communication to get the data quickly or to disseminate information quickly either. So, 5 years then could mean just 5 months now. By contrast, everyone is familiar with this depression and there are already multiple analysis how to bail out of it. Much of the leverage has already been removed from the market. Now, it looks to be more of a sentiment/trust issue. If that is fixed, the market should recover quickly.