Wednesday 7 February 2018

Market fun again

It is so predictable.

Every year fund managers allocate their last monies to simple trackers at the year end. The markets rise into the end of December to make the annual figures look a bit better.

Then they go on holiday.

In January, back they come and mess about for a week or two, sometimes the market goes up a little more.

Then bang come middle of Jan or Early Feb they realise they need to do their number at the year end and there are few good opportunities with the market so high. So they reduce their general funds money and the markets wobble.

Sometimes badly, sometimes not so much. The media panic about a crash and how Brexit/Bitcoin or some other B is destroying the world which is about to end.

Then the re-allocations are made into more favourably priced stuff and the world goes on.

Every year. It's a funny old world sometimes


Steven_L said...

You think? My Lifetime ISA was 100% cash at the beginning of January and my SIPP will 85% cash by Friday morning.

What's this 'more favourably priced stuff'? More favourably prices than what? Facebook? Netflix? Tesla? Bitcoin?

Thud said...

I switched off and made myself busy, I was more interested that intel raised its div by 10% and hasn't been alone in double figure rises, when the dust settles I'll pay attention again

david morris said...

Sanguine to say the least !

Graeme said...

Even gold is sliding. Any thoughts? My take is that everything is now correlated to some extent

Nick Drew said...

That's what happened in '08-09, Graeme - to an extreme extent => almost every asset class correlated

(except, of course, short positions, which are, by definition, inversely correlated ...)

FX positions, though, often don't go that way because some currencies get hit worse than others in such circumstances - e.g. Sterling tanked against the $ (08-09 again)

andrew said...


money (GBP / EUR / USD) is an asset class.

Steven_L said...

That's what happened in '08-09, Graeme - to an extreme extent => almost every asset class correlated

But not in the 'sell in May' 2010 'eurozone crisis' or whatever it was, where gold went up quite a lot.

I'm surprised you haven't had anything to say about ETF's and ETN's yet Nick? I see Mr Icahn reckons a storm is brewing there.

If 'short positions' become the investment of choice what happens when everyone piles out of their S&P500 and NASDAQ trackers and into 3 x daily ultrashort NADAQ etn's etc?