Money moves markets
Posted on November 12, 2007 by Richard Beddard
Filed Under Markets |
An economist/blogger thinks last week’s dip might be a buying opportunity.
Here’s an irony for you. I found about Money Moves Markets from a press release. Why the irony? Money Moves Markets is a blog, and blogging is supposed to be the subversive new medium that cuts out all the middlemen, notably public relations people and journalists.
Presumably, somebody at New Star, the fund management company, would like Simon Ward’s blog to get more attention. Mr Ward is an economist there, and he posts bits of monetary analysis and comment intended to forecast the economy and financial markets.
“Mostly for fun”, he’s tracking forecasts derived from the average performance of the FTSE 100 during and after the three largest bear markets of the twentieth century (1929-32, 1936-40 and 1972-74). Significant deviations below the forecast have proved good buying opportunities since 2002. That was true in August, and he thinks it might be true now.
He also offers insight into corporate earnings figures, on which so many market forecasts depend. Analysts are revising their estimates down, he says, but it’s not necessarily more grist for the bears:
The revisions ratio exhibits a seasonal pattern, with a clear tendency for analysts to become less optimistic (more realistic?) on their return from summer holidays. As the chart shows, after adjusting for seasonal factors the ratio is still at a level consistent with moderate G7 industrial growth.
Interesting that analysts should be swayed so easily by their moods. The same is true of investors and, no doubt, economists. There’s more to moving markets than money alone, but for now I’m tuning into*1 Simon Ward for a monetary perspective.
Footnotes:
- By that I mean I’ve added his blog to my RSS reader, which means I receive updates whenever he posts a new blog. You can subscribe to our blogs that way too.
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