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20 May 2013
From Where Will the Crash Come?
Germany’s benchmark DAX index has clambered to a new record high, but still some people are still convinced the financial markets are due for an almighty crash. (function(d, s, id) { var js, fjs = d.getElementsByTagName(s)[0]; if (d.getElementById(id)) {return;} js = d.createElement(s); js.id = id; js.src ...
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16 May 2013
DAX-Sentiment: This time it’s different
15 May 2013. FRANKFURT (Börse Frankfurt). ‘Stock market rally’, ‘bull market’, or even ‘all-time high’, are all expressions that have long ceased to be reserved for investment professionals. Since the boom in internet stocks in the late 1990s, such references have found their way into dinner party conversations, taxi drivers’ ...
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14 May 2013
A Costly Lesson
It was just three months ago that I had to call the customer service hotline because my dishwasher broke down. The repairs came at a stinging cost of €320, a figure that was almost at the border of a decision to simply buy a new machine, so I had hoped ...
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10 May 2013
Jealous Society
One can hardly blame governments around the world for going after tax evaders. Across Europe, finance ministers are battling to reduce budget deficits while at the same time trying to find resources for stimulus measures, and anti-capitalist upstarts are snapping at the electoral heels of the established parties. Sometimes the ...
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9 May 2013
DAX-Sentiment: Bullishness-Aversion
8 May 2013. FRANKFURT (Börse Frankfurt). Last week (in fact, just four sessions ago due to a German public holiday) sentiment among domestic asset managers on Boerse Frankfurt’s survey panel registered the largest bearish shift in over three years. Since then, the DAX benchmark index not only climbed more than three ...
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6 May 2013
Gold: Panacea or Placebo
This is not the first time that central bank gold reserves have been evoked as a partial solution to public debt problems. In the depths of the Greek crisis, the sale of nation’s bullion reserves was briefly discussed as a means to bring down the debt burden, but the holdings ...
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3 May 2013
DAX-Sentiment: A delayed reaction to DAX’s tumble
Year-low provoked more disquiet than investors let on 2 May 2013. FRANKFURT (Boerse Frankfurt). One of the notable characteristics of the DAX’s corrective decline from the mid-March highs was how little it seemed to influence investor opinion. For most of the past six weeks, the optimism of domestic asset managers ...
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29 Apr 2013
Bespoke Austerity
‘Cut one’s coat to suit one’s cloth’. This is the sort of kitchen-table budgetary advice that is often doled out to those who find themselves in a financial bind. When it comes to a debate about the wisdom or otherwise of austerity of the kind currently practised in peripheral Europe, ...
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25 Apr 2013
DAX-Sentiment: Another unfathomable DAX move
Or is German economic weakness bullish for stocks? 24 April 2013. FRANKFURT (Börse Frankfurt). The half-percent week-on-week gain registered on the DAX index at the time of today’s sentiment survey hides some considerable intra-week volatility. Just yesterday alone, the German benchmark surged 2.4 percent, a price move that for some ...
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22 Apr 2013
The Cold Heart
I relish the chance to make a trip to the Black Forest whenever I visit my native Freiburg. Those woods have the magical ability to chase away all thoughts about financial markets and to stir up long-forgotten memories from my childhood. One such reminiscence on a recent trip was of ...
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19 Apr 2013
The Gold Destruction Team
Let me get my disclosure statement out of the way first: I do not own any gold, nor have I done for quite a few months. I confess to being somewhat biased where the precious metal is concerned. Some might accuse me of smugness in regard to the recent sell-off, ...
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18 Apr 2013
DAX-Sentiment: An understandable ‘flash crash’
Investors know better than to catch a falling knife 17 April 2013. FRANKFURT (Börse Frankfurt). Something resembling a German version of the ‘flash crash’ occurred this morning. In the matter of minutes the benchmark DAX plunged some 200 points to (briefly) record a new low for 2013. There was no ...
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15 Apr 2013
Moral Terrorism
Some see it as an act of desperation. Following the tax evasion scandal involving his former Budget Minister, Jerome Cahuzac, French President Francois Hollande had to do something. Demanding that all ministers make public details of their financial assets is, if nothing else, something. (function(d, s, id) { var ...
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11 Apr 2013
DAX-Sentiment: Of Course! The Ides of March
Another reason for DAX triple-top 10 April 2013. FRANKFURT (Börse Frankfurt). A perennial market discussion about the prospects for a major sell-off in the German equity market was re-inflamed last week. Stock prices slid to new lows for the year last Friday ahead of the publication of the disappointing US ...
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10 Apr 2013
With an ‘S’ on her Chest
A tweeted link to a story about Margaret Thatcher caught my eye this morning, as it certainly did other readers. It related to an accusation by Australia’s foreign minister that Margaret Thatcher held ‘unabashedly racist’ views. The bold headline about the late Baroness’ xenophobia was well chosen; Bob Carr’s other ...
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8 Apr 2013
What Factors Prompt Investors to Invest?
Research by Alok Kumar at the McCombs School of Business shows that investors’ age, location, and interest in activities like gambling have a larger impact on investment behavior than investors’ perceived preferences. In the past, it was believed that so-called irrational behavior of individual investors cancelled out when the market ...
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4 Apr 2013
DAX-Sentiment: Try, Try Again
A sell decision is never too far from investors’ thoughts 3 April 2013. FRANKFURT (Börse Frankfurt). “If at first you don’t succeed, try, try again,” counselled the US comedian W.C. Fields. “Then quit,” he went on. “There’s no point in being a damn fool about it.” Domestic institutional DAX investors ...
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3 Apr 2013
Most Popular Posts of Q1 2013
The readers choices for the first quarter’s most popular posts suggested the continuing pre-occupation with the financial crisis and its solutions sat uncomfortably with the recovery in the equity benchmarks. One of these developments seemed to be wrong. We suspect, for many readers, it was the stock market. 1) What ...
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28 Mar 2013
DAX-Sentiment: ‘I Knew It!’
DAX investors take another stab at a correctional bet 27 March 2013. FRANKFURT (Börse Frankfurt). Even though German institutional investors have expressed a bullish opinion of the blue-chip DAX index every week for almost two full quarters, it would be wrong to describe this optimism as ‘unreserved’. To a large ...
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27 Mar 2013
A Costly Shortage of Gold
It’s the end of the quarter and it has not been a good one for issuers of gold ETFs. Since the start of the year total holdings, as measured by Reuters, has slumped at an unprecedented rate. For the ETF providers, who earn fees based on the amount of gold ...
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25 Mar 2013
How Investors’ Beliefs Rule Their Investment Decisions
It makes intuitive sense that the way people feel about something should dictate the way they behave—that our preferences and convictions are faithfully reflected in the choices we actually make. Although this seems a reasonable assumption, recent research in psychology and behavioral finance suggests otherwise. (function(d, s, id) { ...
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21 Mar 2013
DAX-Sentiment: Crisis; What Crisis?
Media reports overstate investor anxiety 20 March 2013. FRANKFURT (Börse Frankfurt). If financial journalists had a vote on Boerse Frankfurt’s DAX sentiment panel, optimism would be in the cellar. The controversial levy on Cypriot bank deposits has provided grist for a media mill that has been starved of eurozone crisis ...
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20 Mar 2013
The Cyprus Shell Game
Given the number of prominent voices that have been raised against the controversial Cyprus bank levy, it was a wonder it found so much support among the troika – the ECB, EU and IMF. Dmitry Medvedev cried foul, Lawrence Summers saw it as an error, and even former Eurogroup chief ...
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18 Mar 2013
Jesus in the Eurozone
When the financial website “Business Insider” proposed a solution to the euro crisis I was all ears. But when the saviour turned out to be none other than the Saviour, one could forgive me for being a sceptical. Although I agree the euro mess could do with a little divine ...
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14 Mar 2013
DAX-Sentiment: Death by Profit-Taking
13 March 2013. FRANKFURT (Börse Frankfurt). ‘Nobody ever died from profit-taking’ was an old market chestnut we heard last week for the first time in at least six months. Certainly, its revival had something to do with the DAX index reaching the 8,000 mark for the first time since 2008. ...
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13 Mar 2013
Warning: Triple-Peak Forecasters Ahead
As the US equity benchmark, S&P 500, approaches the levels where it peaked in 2000 and in 2007, it feels like open-season for equity analysts predicting a triple-top for the index. I do not want to speculate here about whether we will look back on this point as another historical ...
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11 Mar 2013
Freedom for Me, Myself or I?
A online debate about the merits and dangers of nudging – the ‘soft’ paternalism Richard Thaler and Cass Sunstein promoted in their 2008 book, ‘Nudge’, came to the brink of degeneration last week. The detractors criticised the insidiousness of the behavioural interventions. Nudgers, they suggested, use crafty psychological manipulation to ...
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7 Mar 2013
DAX-Sentiment: Empty Promises
Institutional investors lost patience with the idea of a correction 6 March 2013. FRANKFURT (Boerse Frankfurt). For more than a month, the DAX had promised to move lower. The market had delivered an impressive, almost one-way performance since last November until the end January of this year and had reached ...
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6 Mar 2013
Naughty Nudgers
Economists continue to rail against the kind of libertarian or ‘soft’ paternalism pioneered by Richard Thaler and Cass Sunstein in their 2008 book, ‘Nudge’. A nudge is essentially a method of persuading people to act in a given way by modifying the way the information on which the decisions are ...
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4 Mar 2013
A Pleasure Shared is a Pleasure Halved
“My book got a great review today,” my colleague announced proudly. “Aren’t you supposed to say ‘our’ book,” I interjected, “there were two of you who wrote it after all?” “Of course, I meant ‘our’ book,” he replied in voice that was fully one octave lower. (function(d, s, id) { ...