The Stock Market


The Alleged Evils of “Volatility”

Whenever there is talk in the popular press or in the mainstream financial press about “heightened volatility” in the stock market, it is a euphemism for “the sucker is going down!”. Naturally, with most market participants positioned for rising prices, especially when said prices are in nosebleed territory (stocks are always at their most popular when their valuations are nothing short of crazy), nobody likes that to happen – or let us rather say, only a small minority would welcome it.




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It Can’t Get Any Worse?

On Friday, shortly after the release of the payrolls report, we asked half in jest whether the time had finally come for the market to interpret bad news as bad news, and not as an opportunity to speculate on more central bank largesse. As someone remarked to us later: “You had to ask”.


three-light-switchesPhoto credit: Paul Cross


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$10 Trillion Goes to Money Heaven

LONDON – We interrupt our series on what to do if you have no money to bring you an update on those who are losing it. (You can catch up on Parts I and II of that series here and here.)

What was the best place for your money so far in 2015? Cash! Compared to cash, almost everything is down. We are headed for the worst quarter for stocks since 2011, says the lead story in today’s Financial Times.

Global stock markets have lost $10 trillion of their value over the last three months. What? Where did all that paper wealth go? The old-timers say it went to “money heaven.”


money heavenOne fine morning in money heaven….will it ever rain down again? Of course, no money has actually disappeared. Only make-believe values have.

Image credit: Salvatore Vuono


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Gray Swans and Black Swans

By Monday’s close, the S&P 500 Index was closing in on the low established in the August swoon – such a retest was essentially our minimum expectation, as V-shaped rebounds are very rare. The question is now whether it will only be a retest, or if something worse is in the offing. No-one knows for sure of course, but we’ll briefly discuss what we are looking at in this context.


SwanImage via NYTimes


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An Absurd Idea

Take the notion of the efficient market. What does that mean? Today, hordes of people are coming out of economics and finance majors believing an absurdity. Yes, I said absurdity. They think that, if the market is efficient, it’s impossible to beat the average investor. This is based on the premise that stock prices (or commodity prices, bond prices, etc.) always incorporate all relevant information.




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A Reasonable Risk-Reward Proposition

Obviously today’s FOMC decision (we are writing this shortly before the announcement) could result in a lot of short term volatility, but we nevertheless wanted to briefly remark on the gold sector’s technical situation. Here is a chart of the HUI (daily) with RSI and the HUI-gold ratio:


HUIHUI daily and the HUI-gold ratio – a number of divergences have been recorded recently – via StockCharts, click to enlarge.


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Setting Other People’s Wages

GUALFIN, Argentina – We are delighted with all the back talk we got from our Diary on the “Absurdity of the “Living Wage.” The responses were lively… and entertaining. We laughed. We cried. Many people thought that we had given priests too much money… and prostitutes not enough. We could go either way on that.

Still, we got no complaints from prostitutes, but many from doctors. They wrote in to tell us how hard they worked and how outraged they would be if they earned less than nurses. (Scroll down to today’s Mailbag for more.) They may not have noticed how far our tongue had reached into our cheek. But what fun it is setting other people’s wages!

We even got a letter from a former resident of Communist Yugoslavia who had participated on a government board charged with setting salaries for different job classifications. He was so disgusted by it he emigrated to the U.S.

Finally, one reader probably spoke for thousands: “This is the most idiotic article in the history of articles.” We are too modest to believe it. But if it is so, it is certainly an achievement!

After all, Larry Summers and Paul Krugman write articles too. So do doctors! It is hard to believe that we could top them all. But enough of this. We have to turn to other things… Such as the collapse of the whole world economy!


protest-15-hour-McDsEager to be replaced by automatons: assorted McDonalds personnel

Photo credit: Steve Rhodes / flickr


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