Tuesday, 15 December 2015

Where are thou Santa Rally?

Chart forFTSE 100 (^FTSE)

Stock markets are funny things, they give the right record of the state of the economy until they don't.

They rise and fall on specific company issues, but somehow reflect the whole market.

They are run by machines, but driven by human emotions and greed.

They are rigours beasts but follow obscure folk law rules like 'sell in May and don't come back to St Ledger's day' - which actually work most of the time.

And then you have the 'Santa Rally' nearly every year without fail the stock markets rise into the New Year, and then nearly every year they give up all the  gains in the first two weeks of January.

This year though the Santa rally is yet to kick in, even if it does the year will be a losing year on the FTSE - dragged down by its high resource sector composition.

A losing year on the stock market when the economy is in reasonably fine fettle is quite a rare trick, not something seen since 2001/2 when the tech bubble burst; perhaps the resources sector bubble is the same type of effect on the market overall which means a slow re-build from here as happened in 2003-2007?


Demetrius said...

Rudolph and his team have taken a job with Amazon and are no longer doing delivery, just shelf stacking.

A Non said...

I think the answer is in your final para: the resources bubble has burst but the real economy has not filled the space yet.

I think we are at the beginning of a good upswing. The fall in resource prices, the demographics, and China's switch away from low-value manufacturing point to investment in automation and higher-value sectors.

Steven_L said...

Just looks like I was a year early with my FTSE 5,800 C@W new year prediction to me.

Electro-Kevin said...

Never mind. A Brit has made it into space. (Even if it was on a Russian space craft.)