Fear ye, fear ye, all ye who tread in the global financial markets the Death Cross is upon us. Prepare yourselves as the tsunami/hurricane/earthquake hits your investments and pensions and the Death Cross, yes, the eeeeeeevil Death Cross, begins to take hold.
Okay, so most of you are thinking “What blimin’ Death Cross? Sounds like something out of Dungeons and Dragons”.
The official definition for a Death Cross is when the 50 day moving average of whatever stock or stock index you are following dips under the 200 day moving average. So that's the Death Cross? You ask. Yes, that's the Death Cross. I reply. It all sounds very boring I know.
Sorry for the let down, are you still reading this?
Well if you are, it's probably best if I tell you exactly what a 50 day moving average is. Simple. Add the closing price of the last 50 days for whatever it is you want the moving average for and then calculate the average. For the 200 day moving average you do the same, but obviously for the last two hundred days. It's so easy even a banker could instruct his intern to do it. By using the 50 and the 200 day moving averages you can do a pretty picture by plotting the numbers on a graph and then you get.
Dun-dun-daaaaah. The Death Cross!!!
And here’s one I made earlier… well no, I didn’t Reuters did and then I took it off of a CNBC news article about the Dun-dun-Daaah!!! Death Cross.
Josh Brown, CEO of Ritholtz Wealth Management made the point that the average return from the Dun-dun-daaah! Death Cross was 11% in the following twelve months and in only two out of nine times was there a negative return.
So how scared are you now?
Let me explain to you the Death Cross when it comes to financial terms. Ever heard of reading tea leaves? Well this is similar it has no bearing in reality and it’s designed for only one thing. To relieve you of your money. To relieve you of your money the financial industry gets you to do things, because when you do things, you’ll generate commissions for brokers, bankers and market makers ooh my.
No amount of reading financial tea leaves will tell you what will actually happen in the future, but if you do want a real reason to be scared then this is one that should keep you awake at night and is based on fact: