Business is booming.

The sell-off in market silliness


A month ago a Financial Times reader pithily described their investment strategy for 2021 as “just buying what my kids want to buy and holding eyes firmly shut on valuation”. For much of the year it would have worked like a dream. Until now.

The primary cause for the recent bout of market turbulence was the emergence of a new, highly contagious coronavirus strain and the Federal Reserve’s simultaneous pivot to a more hawkish stance to contain the threat of inflation. That has forced investors to start pencilling in earlier interest rate rises in 2022.

Superficially, markets have handled it coolly. Most mainstream stock market indices remain near their peaks. But look closer and the pain becomes more apparent. Across the board, many of the year’s most outrageously successful trades — and in the eyes of some market veterans, most heinously silly — have come undone.

Cathie Wood’s Ark Invest was emblematic of the rally, and encapsulates the recent setback. Her flagship fund gained almost 150 per cent last year as investors embraced its theme of “disruptive innovation” in areas such as artificial intelligence and genomics. Despite a strong midweek bounce, it has now tumbled more than 21 per cent this year, pushing it into a bear market.

However, Ark is merely the tip of a vast iceberg of speculation that has grown to monstrous proportions over the past year. It is now starting to melt a little.

A Goldman Sachs index of unprofitable US tech stocks has lost more than a fifth of its value over the past month. Bitcoin is 28 per cent off its peak. So-called meme stonks such as cinema chain AMC and GameStop — beloved by the self-confessed “apes” and “degenerates” on Reddit — have been taken to the woodshed. ‘Special purpose acquisition vehicles have lost their boomtime bloom.

Chart showing Goldman Sachs' non-profitable technology index

Is this just a blip, or is sanity making a tentative return? And if it is the latter, could it presage the beginning of a broader stock market downturn?

Many veterans hope this is just the end of the silly phase. The severity of the declines in the riskiest trades indicates that “peak insanity” is behind us, according to Doug Ramsey, chief investment officer at The Leuthold Group.

“We think 2021 has earned its place in the books as the wildest and most speculative year in US stock market history, eclipsing even 1929 and 1999. That doesn’t mean 2022 will bring a panic or a crash, maybe just a degree of sobriety,” he argued.

This would be a dream scenario for the US central bank. Although inflation has accelerated, policymakers for the most part remain confident that the data will moderate next year. But the euphoria in some corners of the financial system will have worried them.

If the signalled acceleration of the “tapering” of the Fed’s bond purchases — and the implied earlier interest rate increases in 2022 — helps blow some of the froth out of markets without plunging them into turmoil, it would be the perfect outcome for the central bank. Many investors would also welcome it, on the basis that a sober rally is a more durable rally.

However, the mania of the past year may be harder to dispel than many think. For more than a decade, the dominant theme has been “buy the dip”. Again and again, it has proved to be a successful trading strategy, helping the mentality worm its way into the subconscious of everyone from ordinary day traders to titanic hedge fund managers.

Indeed, Bank of America notes that all three of its major client segments — hedge funds, big investment funds and wealthy individuals — have all bought the dip this past week. Reddit’s infamous r/WallStreetBets forum is teeming with defiant memes from uncowed traders.

That is understandable. After all, Goldman’s unprofitable tech stock index has still returned 164 per cent over the past two years, even after the recent tumble. And for all the understandable concern about central banks becoming less charitable in 2022, it remains doubtful that they will be willing or even able to raise interest rates significantly.

Government bond yields are therefore likely to remain negative in real, inflation-adjusted terms for years to come. Trillions of dollars are still sloshing around the financial system, desperately sniffing about for even the faintest whiff of potentially abundant returns. That is a wonderful environment for long-shot bets like those espoused by Ark Invest, even if many, by their nature, will not pan out.

Yet dangers lurk. As long as inflation stays uncomfortably hot, central banks may be more reluctant to ease monetary policy if markets suffer a broader, steeper fall — which has been the primary reinforcement mechanism for the buy the dip mentality.

For example, in late 2018 it was relatively easy for the Fed to back away from plans to tighten monetary policy and reverse a violent financial market sell-off because inflation remained quiescent. Doing so is much harder when prices are rising at the current rate.

The sell-off in silliness could therefore still prove to have been the first quiver of a coming earthquake. Even the dotcom bust was not recognised as such until well after it was a reality.
Follow on Twitter: @robinwigg

Unhedged — Markets, finance and strong opinion

Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here to get the newsletter sent straight to your inbox every weekday

Source link

  1. 온라인카지노 says

    Hi to all, the contents existing at this web page are actually amazing for
    people knowledge, well, keep up the good work fellows.

  2. Aalyac says

    levofloxacin 500mg generic order levaquin 250mg generic

  3. Nbcpoo says

    avodart online order ondansetron 4mg oral zofran tablet

  4. Rxfuzq says

    oral aldactone 25mg purchase propecia sale order diflucan 100mg pills

  5. Dkpzst says

    oral ampicillin 500mg purchase cephalexin sale buy erythromycin 250mg generic

  6. Ixlgtm says

    fildena cost order careprost without prescription methocarbamol medication

  7. Ecyfyn says

    buy suhagra pill estradiol canada buy estrace without prescription

  8. Bruqjb says

    lamotrigine online order cheap retin gel retin cream uk

  9. Zblsnl says

    buy tadalis 10mg online brand tadalafil diclofenac price

  10. Aeckeh says

    buy isotretinoin sale order amoxicillin zithromax online buy

  11. Ocmfpt says

    order indomethacin terbinafine 250mg price trimox oral

  12. Cxdicy says

    buy cialis tablets ed pills that work buy sildenafil 100mg without prescription

  13. Bbhdek says

    purchase anastrozole online brand clarithromycin 250mg sildenafil 50mg price

  14. Adjvlk says

    order deltasone 10mg cialis medication sildenafil 50mg cost

  15. Bjkihi says

    cialis kaufen generika original tadalafil 5mg rezeptfrei sicher kaufen sildenafil 50mg kaufen für männer

  16. Nftefg says

    accutane brand order amoxil 1000mg online cheap ivermectin 12mg for sale

  17. Oysodl says

    provigil generic Sales cialis diamox 250mg tablet

  18. Ecsxlb says

    order doxycycline 200mg without prescription buy generic furosemide 40mg order lasix

  19. Mwrwux says

    generic altace 5mg avapro oral purchase azelastine online

  20. Conjrw says

    order catapres 0.1mg generic order meclizine 25mg online order spiriva 9mcg for sale

  21. Mipzax says

    buspirone canada buspirone 10mg over the counter oxybutynin 5mg over the counter

  22. Sfxqip says

    hytrin ca buy arava pills azulfidine 500mg oral

  23. Wfrebd says

    buy fosamax 70mg for sale pepcid 20mg cost buy famotidine 40mg online cheap

  24. Nhboqu says

    order olmesartan 20mg sale purchase depakote diamox 250 mg oral

  25. Irdurf says

    brand prograf 1mg buy prograf 5mg generic urso 150mg cost

  26. Ufuryr says

    bupropion ca cheap bupropion quetiapine online buy

  27. Ibvnyx says

    molnunat order order molnunat 200mg without prescription cheap lansoprazole 30mg

  28. Nltvdf says

    sertraline us buy sertraline 100mg online sildenafil drug

  29. Muiavc says

    imuran 100 mcg ca buy pantoprazole sale sildenafil tablets

  30. Tlcbzg says

    buy cialis 20mg pills order fluoxetine 20mg sildenafil overnight delivery

  31. Nfchps says

    tadalafil 5mg tablet brand amantadine 100mg order symmetrel 100mg

  32. Tpnifx says

    revia for sale online order femara 2.5 mg pills buy aripiprazole 20mg for sale

  33. Tgoepc says

    order avlosulfon 100 mg generic allegra 180mg pills order perindopril 8mg generic

  34. Gwncwq says

    provera generic brand biltricide 600mg order periactin 4 mg for sale

  35. Ngjsuz says

    order provigil online cheap order stromectol 12mg online ivermectin brand

  36. Qvephc says

    purchase fluvoxamine pills buy glucotrol online cheap buy glucotrol 5mg pills

  37. Eujpbj says

    isotretinoin online buy amoxicillin pills buy deltasone pills

  38. Mklofk says

    piracetam 800mg drug viagra for sale online viagra 100mg

  39. Nkowvd says

    order generic azithromycin 500mg buy zithromax sale order neurontin 100mg

  40. Qrsici says

    female cialis pill tadalafil 10mg usa buy sildenafil 100mg generic

  41. Ljfnuo says

    cost furosemide 40mg plaquenil over the counter buy hydroxychloroquine 200mg pill

  42. Xqvtcf says

    buy cialis online cheap order tadalafil 5mg online clomipramine pill

  43. Heqtpu says

    aralen for sale oral chloroquine oral baricitinib 2mg

  44. Bliosx says

    order sporanox pills tinidazole 500mg cost tindamax 300mg usa

  45. Mcuilk says

    glucophage pills atorvastatin 10mg ca purchase tadalafil pills

  46. Cdhkjy says

    zyprexa order online bystolic for sale online order generic diovan 160mg

  47. Gilmtt says

    buy norvasc 10mg generic norvasc buy online buy cialis 10mg for sale

  48. Bjsbyp says

    clozapine generic decadron medication oral decadron 0,5 mg

  49. Ltaypm says

    buy linezolid online real casino slots free blackjack games

  50. Zbqkjm says

    prilosec 10mg usa purchase prilosec generic best online gambling sites

  51. Cwzdlt says

    lopressor 50mg generic atenolol 50mg cost order vardenafil

  52. Gayoyc says

    buy a dissertation cash poker online bonus poker online

  53. Rkfcrj says

    buy levitra 10mg generic medrol 8 mg oral medrol 4mg pills

  54. Utnnfy says

    buy generic clomiphene casino slots online casino slots no download

  55. Lgueig says

    aristocort 10mg canada buy triamcinolone 4mg online cheap purchase desloratadine for sale

  56. Fkumng says

    order priligy 60mg online order cytotec 200mcg online cheap order synthroid 75mcg online

  57. Iuykbi says

    order orlistat 120mg online cheap order orlistat 60mg generic acyclovir us

  58. Nccubf says

    is cialis generic buy inderal 10mg pill order clopidogrel online cheap

  59. Xmlowo says

    zyloprim 100mg for sale buy generic rosuvastatin 10mg cheap zetia 10mg

  60. Wabpyb says

    cheap methotrexate 10mg order warfarin generic order metoclopramide 20mg generic

  61. Mpciqe says

    domperidone 10mg ca domperidone order cyclobenzaprine pill

  62. Tkhrlj says

    brand losartan esomeprazole oral topamax 200mg tablet

  63. Jpwwbo says

    baclofen 10mg uk ozobax cheap order toradol

  64. Qosjev says

    purchase imitrex pills buy imitrex 25mg generic dutasteride for sale

  65. Woidyg says

    gloperba tablet slots games free casino bonus

  66. Hensyp says

    buy generic zantac order celebrex 100mg pills order celebrex 200mg online

  67. Poqzrt says

    online casino bonus play blackjack casino games online free slots

  68. Ddoted says

    flomax 0.4mg uk buy tamsulosin 0.2mg for sale buy aldactone for sale

  69. Yrivjz says

    cialis 5mg generic cheap ciprofloxacin 1000mg cipro 500mg over the counter

  70. Gnmamj says

    order simvastatin 10mg pills order valtrex 1000mg pill proscar for sale online

  71. Hnjnvw says

    buy flagyl 200mg online cheap buy metronidazole 400mg generic bactrim 960mg uk

  72. Dkuxvq says

    fluconazole ca order diflucan without prescription sildenafil pills

  73. Gmiwtn says

    cialis pills 5mg viagra sildenafil viagra 200 mg

  74. Opkato says

    pfizer viagra sildenafil 50mg generic buy tadalafil 10mg sale

  75. Lvnzlc says

    cefuroxime 500mg usa purchase cefuroxime for sale methocarbamol 500mg pills

  76. Esbpdy says

    free online roulette tadalafil us purchase cialis

  77. Kontvw says

    trazodone 100mg price buy desyrel 50mg online sildenafil pills

  78. Esspyh says

    my best friend essay writing write my assignment for me ivermectin purchase

  79. Qejixn says

    viagra sildenafil 25mg sildenafil overnight shipping order lamictal 50mg generic

  80. Fyplku says

    order deltasone 40mg online amoxicillin order online amoxil 250mg uk

  81. Ffyinl says

    sildenafil women buy generic cialis order cialis 40mg online

  82. Gciiey says

    caesars casino online play online casino real money tadalafil dosage

  83. Mgnoos says

    order azithromycin 500mg online azithromycin us neurontin online

  84. Paokfl says

    jackpot party casino live blackjack provigil pill

  85. Dyfyjy says

    oral lasix 100mg furosemide canada plaquenil 200mg pills

  86. Mllohv says

    sildenafil over the counter purchase fildena online cheap cost rhinocort

  87. Jdciqr says

    prednisone 40mg without prescription buy mebendazole 100mg generic order mebendazole 100mg sale

  88. Jgmtmj says

    retin cream generic order tadalafil 10mg pills buy avana generic

  89. Ruqenz says

    purchase tadalafil generic buy generic indomethacin 75mg indocin price

  90. Kpcdkf says

    generic terbinafine buy trimox 500mg online purchase trimox pill

  91. Nkvseu says

    order clarithromycin 500mg online cheap order generic clarithromycin 500mg order generic meclizine

  92. Phudiv says

    buy naprosyn 500mg purchase omnicef sale lansoprazole us

  93. Adcpow says

    spiriva 9mcg uk tiotropium bromide 9 mcg generic hytrin cheap

  94. Wyewgm says

    buy proventil 100mcg pill purchase pantoprazole pills ciprofloxacin 500mg pill

  95. Kckjac says

    buy pioglitazone 30mg online sildenafil next day delivery usa order generic sildenafil

  96. Ofwtoh says

    order singulair 5mg pill purchase montelukast sale sildenafil otc

  97. Tmbhsa says

    cialis 40mg pills Discount cialis play casino

  98. Flvrvd says

    buy tadalafil 40mg pill cialis 20mg pill purchase cialis for sale

  99. Obheuo says

    world poker online casino world play poker online free no sign up

  100. Xwqxpu says

    ivermectin ireland buy avlosulfon 100mg online cheap order avlosulfon for sale

  101. Zpmcqi says

    roulette online with real money roulette online for real money hollywood casino online real money

  102. Alhucx says

    adalat 10mg without prescription adalat price purchase allegra online cheap

  103. Uwumdg says

    online casino real money us pharmacy online shopping usa money can t buy everything essay

  104. Qetesh says

    ramipril 5mg uk purchase glimepiride sale order arcoxia 120mg sale

  105. Silaswesee says
  106. Ihmkcu says

    online assignment writer cheap dissertation help order azulfidine generic

  107. Kjvpdv says

    doxycycline generic doxycycline 200mg cheap cleocin 300mg canada

  108. Dannysoigh says
  109. Dannysoigh says

    cialis 5 mg precio tadalafil 5 mg cialis 5 mg

  110. Xjlsso says

    order asacol pills azelastine 10ml ca avapro 300mg pills

  111. Qzzzji says

    buy acetazolamide 250 mg generic buy diamox online cheap generic imuran 50mg

  112. Xcuteo says

    buy temovate generic brand buspirone buy amiodarone pill

  113. Samuelhig says

    Read information now. Get information now. sildenafil prescription canada
    Cautions. п»їMedicament prescribing information.

  114. Ajdjoy says

    cost lanoxin 250mg telmisartan 80mg pills generic molnupiravir 200 mg

  115. AlbertPhync says

    Long-Term Effects. Actual trends of drug.
    best price for tadalafil 20 mg
    drug information and news for professionals and consumers. earch our drug database.

  116. Emdjnk says

    buy dapoxetine 30mg sale buy domperidone 10mg domperidone 10mg tablet

  117. Purdzv says

    order alendronate 35mg online cheap fosamax 35mg order ibuprofen generic

  118. AlbertPhync says

    Everything about medicine. Drugs information sheet. cialis replacement
    Cautions. What side effects can this medication cause?

  119. Pobciz says

    indomethacin 50mg oral indomethacin 50mg capsule cenforce 50mg cheap

  120. Ioqfuq says

    buy nortriptyline generic buy panadol 500 mg pill buy generic paroxetine 20mg

  121. AlbertPhync says

    Cautions. Some trends of drugs. tadalafil 5 mg tablet coupon
    Medscape Drugs & Diseases. Some trends of drugs.

  122. Bwgdxu says

    order doxycycline for sale aralen 250mg oral medrol pill

  123. Gcdfza says

    generic pepcid pepcid without prescription mirtazapine pills

  124. Bimwnc says

    purchase requip pill ropinirole drug order labetalol 100mg for sale

  125. Ocbojn says

    purchase tadalafil clopidogrel 150mg uk buy trimox 500mg

  126. Ikniiu says

    cost esomeprazole 40mg buy clarithromycin 500mg online order lasix 100mg pill

  127. Isdang says

    buy tadalafil 40mg generic Best price for generic cialis purchase viagra sale

  128. Cynqmu says

    minocin 100mg canada order neurontin 800mg pill brand terazosin 5mg

  129. Cpbwlr says

    order tadalafil 10mg online buy ed pills online medication for ed

  130. Imzfvq says

    order glycomet 500mg generic glucophage 500mg uk buy nolvadex 20mg generic

  131. Hkdhyb says

    order modafinil 100mg stromectol tablets for humans phenergan order

  132. Ngaduj says

    clomiphene 50mg over the counter lipitor 40mg sale order prednisolone 40mg online

  133. Kywvex says

    prednisone 5mg oral prednisone brand amoxil 250mg brand

  134. Uilgfy says

    buy isotretinoin 40mg online cheap order deltasone 20mg brand ampicillin 500mg

  135. Ykdhgk says

    over the counter erectile dysfunction pills purchase lyrica without prescription order proscar 1mg online

  136. Njjevc says

    ivermectin 3 deltasone 10mg cost deltasone 10mg usa

  137. Xbdjgl says

    zofran oral bactrim 480mg uk buy generic bactrim 960mg

  138. Urmxck says

    order isotretinoin pills generic amoxil 1000mg buy azithromycin 500mg pill

  139. Ewyiok says

    provigil 200mg generic metoprolol 100mg oral order metoprolol sale

  140. JasonOreby says

    купить птс
    баланс карты купить

  141. Kevinfret says
  142. Avpysy says

    buy vibra-tabs generic buy vardenafil sale buy zovirax 400mg without prescription

  143. Dzcncx says

    avodart 0.5mg uk buy keflex 125mg purchase orlistat without prescription

  144. Kpaqiq says

    imuran over the counter naprosyn online order buy naprosyn 250mg

  145. Drrtlm says

    order oxybutynin 2.5mg sale purchase oxybutynin generic brand oxcarbazepine

  146. DavsadidJuire says


  147. Aotosn says

    buy cefdinir without prescription prevacid usa purchase pantoprazole generic

  148. Fceebm says

    buy generic zocor 10mg buy promethazine 25mg for sale sildenafil 150mg for sale

  149. Wqlswc says

    buy dapsone 100mg for sale avlosulfon for sale order tenormin 100mg without prescription

  150. Eikxad says

    alfuzosin cost trazodone 100mg pills buy diltiazem

  151. Chadrleshouse says

    займы на карту без отказа мгновенно
    займ на карту
    займу на карту с кредитной историей

Leave A Reply

Your email address will not be published.