Moving markets...

At the end of the working day yesterday -  Wednesday 7th Feb 2018 -  the FTSE was up 138 points or nearly 2%, the Dow Jones Industrial index was up 0.2% after a 2% rise the day before and most of the developed markets have had green (positive) days post the normal levels of volatility seen earlier this week and last.

I watched with real interest, the market commentary go a little crazy in the aftermath of a 4/5% sell off of world equity markets.

Overblown media

This article from the BBC summed up the madness for me, with the headline ‘Stocks fall for two consecutive days’ http://www.bbc.co.uk/news/business-42880629

How starved of news must these writers be that there is a headline when stocks fall for more than 1 DAY. I’ll repeat that in bold again 1 DAY…. ?

The BBC followed up with this beauty today - http://www.bbc.co.uk/news/business-42970283 ‘US stock rise after wild swings’.

Wild swings? A 5% drawdown followed by a 2/3% recovery…. This is madness. It speaks volumes about the worry and panic that these outlets will likely spread when an actual bear market hits. Large ROBOs in the US were temporarily shut down as their servers melted down from too many people logging into their portfolio’s!

My last blog was on managing behaviour and this is a topic I’ll have to come back to because, judging by the levels of crazy this week, the problem is far worse than I had imagined.  

Social saviours

Logging in to social media also provided an interesting perspective. As I’m a financial planner, I follow a lot of people in my industry to learn from and hear what they’ve got to say. On this particular day, large swaths of people were tweeting about the markets and how to manage behaviour, have a long-term view, drown out the noise etc.

Now of course those would definitely be approaches I would advise to clients. However, I found people so quick to jump on this bandwagon that in my view they were actually fanning the flames and adding to the noise. I understand their strategy, I just felt they missed the point.

On that note I don’t want to fan the flames any further, I did have a message or two from clients and the response was simply to say don’t worry, there was nothing extraordinary about these market movements, it’s all normal and not to panic. We don’t want to make multi year investment decisions on the back of 24 hours of news!