Haphazard Linkages

Bonhomie. So much of it wafts through the market air currently. Hannibal Lecter’s quote from Red Dragon in the subject line wells up in one’s head. (Though some would counsel against letting Dr. Lecter crawl into one’s brains.) The past decade has seen a major change in the way market participants think about positioning. Like a responsible parent helping toddlers to get on their feet, central banks globally have held the market’s hands through periods of disquiet. We have learnt to walk, indeed. Conditioning has nudged us to presume the parent’s omnipresence during future periods of turmoil. Assorted naysayers, bear mongers have been shaken out. Converts and survivors from The Resistance have taken to trend following, along the path of least resistance. Up. Momentum plays on liquidity – the ETF brigade – have added to the crowd. The zigging and zagging of prices – Volatility – has progressively entered hibernation, as a result. QUIETER...and QUIETER Vo...

With most market participants making money this year, the timeless quote by Napoleon in the subject line rears its head, once again. Regular non-readers know the wonderment I have on the impact of luck on investment outcomes. The markets have been on a tear (sure you didn’t notice), and my mailbox/chat is seeing two polarized stances. On one side is the  Bullish Apology . Where market participants pre-emptively share justifications for continued strong markets everywhere. This group exhibits hyper optimism, using recent history as the periscope through which to peer at and gauge the future.  The second, and potentially, the more interesting group, is the  Bubble Babble  crowd. This group looks askance at the rallies, and deems things a bubble. This year has given this group a great polarizer. Bitcoin. A tiny bit know much about it. Most know a bit about it; yet there is a growing supply of those sharing their two coins, calling Bitcoin a bubble. Both gr...