Long story short: in most cases, don’t even bother “answering” the question.
More often than not, anyone that asks this question almost always thinks they know the answer. So, they will probably contradict you or start an argument for no good reason. As for the people genuinely asking because they don’t have a clue – chances are, they’re so oblivious to “the markets” that they won’t understand a well-thought out answer, so deflect and duck out of this with them.
No matter who is asking this question, there are 3 thoughts we need to keep in the forefront. First – nobody, and I mean nobody (https://www.youtube.com/watch?v=hAQA_29Htts), has the right answer when it comes to the future of any market. Half of the masses will guess one way and half the other. This has taken place for all of the past and will continue forever, so some idiots are bound to think they know the answer because their outlook was correct the first 2-4 times. Inevitably, this will correct itself to a 50% accuracy. So, if you want my take, never talk to these idiots about anything related to any financial markets. I have a bunch of friends like this and that’s why I don’t talk investments outside of the office or a work-related event. The second thought, a continuation of the first fact that nobody knows shit, is that we have to avoid any potential disagreement because there is no good coming out of it. The best way to do this is to make arguments for both sides, thus acknowledging the bull and bear scenario. This will show your counterpart that you understand both sides of the issue. Now, it’s hard to argue with someone who just (accurately) explained why you hold a certain bias. This is especially important when an interviewer asks you about the markets. Giving both sides of the argument will put you ahead of at least half of your competition. It shows how and why you are aware that there are no certainties in financial markets.
The final thought we must keep in mind is actually what your first response should be to this question. Which market are you talking about?! Other than avoiding a worthless argument with a cousin, impressing an interviewer by asking this question is the only situation where one would be concerned about “the markets” question. The most common response to this question is where someone starts talking about the domestic stock market right off the bat. Never mind the actual content of this response, the fact that a candidate starts talking without any clarification gives the interviewer all sorts of potential negative insight: the candidate doesn’t acknowledge other financial markets; believes the most important market is the stock market; is not aware of global context; is nervous and avoiding interactions; has a canned response, etc etc etc. So, before you answer a question, make sure you’re answering the right question!
Let’s finish up by labeling the infinite possibilities of that final thought and explicitly classifying potential answers. Then, follow along with our Investing Blogs where we periodically answer “what’s going on in the markets.” (Summer 2017 market update)
TRADABLE “MARKETS”
– Stocks
– Bonds
– Currencies
– Commodities
(the last 3 constitute FICC – Fixed Income Currency & Commodities)
– Bitcoin….joking, this is speculative nonsense at the moment.
Markets are further characterized, broadly, by “domestic” and “international” or “global.” Global would include both domestic and international. How do we break up international though? Here’s a good visual as official as it gets (my broader/general description below): https://www.msci.com/market-classification
INTERNATIONAL MARKETS
– Europe – depending on situation could be a good idea to break out the UK
– Emerging Markets – can usually throw these all in one heap, as long as EM isn’t a focal point
– Japan and developed Asia – usually doesn’t need the latter and Japan might suffice
Lastly, during an interview, do you want to offer current events and current situations of the aforementioned markets, or summarize what’s went on over the last few months/year, or offer your opinion of the future outlook? Good question….start by asking exactly that before you attempt an answer. It will show how you understand broad topics within context of time and purpose.
“nobody, and I mean nobody has the right answer when it comes to the future of any market” — I once read a book that had a conversation between a technical analyst and his boss, owner of an investment firm (plus rich). The boss, to his analyst, says “This stock has been falling since past 2 days, how do you think this stock is going to perform today?”, the analyst replies “you see, there is a major support at 130 level, I am super confident that this stock will touch 130 level and then reverse”. Soon, the stock hits the 130 level, and the boss picks up the phone and sells a massive position in that equity. The stock went crashing down below 130 and then the boss says, “sometimes you need to build the future yourself”.
This scenario is contradictory to the fact that “nobody” has the right answer. Maybe, some people do have the right answer. (https://en.wikipedia.org/wiki/Harshad_Mehta)