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Do they know something? Informative conformity and stocks
The herding instinct is strong in markets. Solomon Asch would characterise this as ‘informative conformity’ where the participant would disbelieve the evidence of their own eyes and yield to the group think. In Asch’s experiments, the results were remarkable, particularly given the exclusion of outside variables beyond the comparative data (the height of the columns […]
Continue readingWhining about US winning
So if Trump’s tariffs are going top hurt the US so much why is the US dollar going up by so much? If Trump’s tax reductions are going to increase the budget deficit, why are currency markets so unconcerned? It is because currency markets understand Trump is going to win. His tax cuts are […]
Continue readingProsieben – a sub +1% growth stock or just oversold?
Spare a thought for those long suffering shareholders of German commercial TV stocks, RTL and Prosieben as Morgan Stanley dumped on the stocks with a negative report on Friday, sending them down a further 7% and -6% respectively against the DAX index that was up +1%. Presumably it was another rendition of the argument that […]
Continue readingAre you applying the wrong valuation currency?
Prices are set by the marginal buyer, while financial markets establish conformity around valuation currencies that encourage buying, which in turn stimulates more borrowing and therefore more ‘moolah’ for those that dominate these markets. The latter obscures the ‘real’ price that is being paid by the former, which is why they need tools such as […]
Continue readingGolden opportunity or just Cultural appropriation?
For Gold bugs, wouldn’t you rather invest in a miner, where its production currency had contracted by almost -20% relative to gold’s principal selling currency, the US dollar? Unfortunately, when the currency in question is falling due to political instability and government threats of confiscation without compensation of property based on race, then the answer […]
Continue readingAT&T Time Warner offer – OK with judge, but now less so for TWX shareholders
Time Warner shareholders may feel a sense of relief that the AT&T bid is now clear to proceed, but the harsh reality is that they are being screwed. Time value and a declining performance and share price of AT&T has seriously eroded the original offer premium to … ZERO. Indeed, it could be strongly argued […]
Continue reading“Normal profits are becoming normal for airlines” – be afraid!
Recency bias is alive and well. “At long last, normal profits are becoming normal for airlines”, so says the IATA in its June 2018 industry update titled “Solid Profits Despite Rising Costs”. After a couple of years of improving margins and ROIC, is this a paradigm shift for investors to jump aboard? Unfortunately, it feels […]
Continue readingGDP driven rate increases in the US threatens to pummel an already challenged ECB QE policy
Equity markets were widely reported to have bounced on Friday after the solid May private sector job growth, albeit the accompanying rise in average hourly wage growth presages another rate rise by the Fed. With EU’s grip on its southern flank unravelling as friendly regimes in Spain and Italy are replaced however, the prospects of […]
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