The following is an excerpt from: Tom Stevenson | December 3, 2011 | Telegraph.com
(Picture on Left: One thing investors have learnt this year is to expect the market to turn on its heels at the first sign of disappointment. Photo: Reuters)
So let’s just recap the string of “good” news fuelling the best week for global stock markets since November 2008, a week in which shares rose by almost 9pc, a kind of reverse correction.
What combination of positive developments could have triggered such a positive swing in investor sentiment?
Could it have been the OECD warning that we are almost certainly halfway through a double-dip recession? Maybe it was the Chancellor preparing us in his Autumn Statement for another five years of painful austerity. Or an angry public sector taking to the streets and driving a wedge between itself and a resentful and increasingly unsympathetic private sector.
What about the Governor of the Bank of England warning us about the “extraordinarily threatening environment” we’ve moved into? Or the growing evidence that the arteries of the global banking system are furring up as they did in the wake of the Lehman collapse? Or the slowdown in China that emerged last week? I could go on.
If ever you needed evidence that the stock market marches to a different beat than the headline writers, last week provided it. Markets don’t reflect what’s going on, they anticipate it, which is why investment is so much harder than it looks with the benefit of hindsight. As Jimmy Goldsmith once said, “if you see a bandwagon, it’s too late”.
Another investment truism is that it is better to travel than to arrive. So, if next week really is make or break time for the euro, then investors should be at least a little afraid after this extraordinary rally. It would not be the first time that Europe’s politicians have disappointed us, after all.
To read more: Telegraph.com
