Thu 2 Oct 2008
Stock market performance round-up: In the grip of the bear
Posted by Prieur du Plessis under Investment, Markets, Money
Downright awful! That is about all one can say about the performance numbers for measurement periods until September 30. As pointed out in a post at the beginning of the month, September, on average, has historically been the worst month. And the past month truly lived up to its reputation.
Firstly, something in lighter vein.
Source: Unknown
Losses occurred throughout as shown vividly by the performance tables being engulfed in red. The numbers speak for themselves, although a few observations are worthy of comment.
Emerging markets, in general, have underperformed mature markets over all measurement periods, and increasingly so since the peaks of May this year - so much for the expected decoupling of the stock markets of high-growth developing countries from those of the mature markets.
The Venezuelan Caracas Index bucked the trend and was the only index to deliver positive returns over the three- and six-year and YTD periods. Don’t hold your breath for nationalization doing the same for the US and European stock markets!
In local currency terms, investors in the Toronto S&P/TSX 300 Composite Index (-22.0%) had the dubious honor of having registered the smallest loss since the various markets’ respective highs, followed by the Russell 2000 Index (-23.1%) and the Dow Jones Industrial Index (-23.4%). In dollar terms North America and Canada still fared relatively well, but were pipped at the post by the Swiss SPI Index (-21.4%).
On the deep red side of the scale, the Dublin ISEQ Index (64.4%), the Shanghai Composite index (-62.3%) and the Russian Trading System Index (-51.1%) have all seen investors’ money being halved.
Regarding the outlook for stock markets, David Fuller (Fullermoney) had the following to say: “We are entering a seasonally bullish period for equities. Yes, stock market indices are in overall downward trends and you can see big overhead top formations on the charts. However, the trends are also at least temporarily overextended and sentiment is at a bearish extreme. Therefore the next significant move is likely to be a reversion to the mean, in the form of technical rallies towards the moving averages.”
Caution remains key to investment decisions – there is no point in being brave at this juncture.
Click on the image below for a larger table
Click on the image below for a larger table.
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October 2nd, 2008 at 5:33 pm
Prieur - an unfortunately nice and accurate summary but the s.t. oversold maybe a bump coming might have a challenge to it. I’ve learned, painfully and expensively, to think of markets on four levels at four inter-linked timeframes. Structural - deep shifts in the structure of economies and industries, e.g. BRIC emergence, Detroit implosion, etc. Fundamentals - where are we at in the business cycle, what are the trends, patterns and turning points. We’re in a slowmotion slowdown, or were, and it tipped over about 6-8 weeks ago. Which they data is now telling us via the headlines this week. Visible much earlier. Technicals - what’re the charts telling us. Each of the bear rallies todate was playble but ill-grounded IMHO. Sentiment/Psychology - those bear rallies were based, again IMHO, on serious mis-readings of the depth of the credit problems, the metastasizing financial crisis (how many bottom callers were there since Jan) and a serious collection of delusions about the economies, e.g. de-coupling. The first two factors have been unrelievedly negative for over a year, the 3rd has run the gamut driven by psychology. Now here’s the multi-$B question:
Are we finally seeing a shift in sentiment and a fuller grasp of reality ?
On your and THE answer to that lies yet another playable bear market ralley which is likely to short and mild.
FWIW