: Michael Wilson can’t shift that nagging doubt
Triskaidekaphobia. A tricky enough word, even on a quiet morning without a hangover to blame. And that’s just the thirteenth bit – the Friday is an additional sophistication that comes with no extra charge.
Nobody, in fact, seems to know exactly where the Friday bit comes from. But as for the thirteen, was it the fact that it’s the first prime number that’s big enough to be troublesome without having any obvious use? (Seven, five and eleven all do useful mathematical things of one sort or another.) Or was it that there were thirteen round the table at the Last Supper?
Don’t ask me, I’m just an investor. All I know is that we’ve got safely past Sell In May And Go Away, and the sky doesn’t seem to have fallen in yet. The volatility boys tell us that the Vix number is running about as low as it normally gets, so it doesn’t look as though my concerns are very widely shared. But, as Brian Tora notes in this month’s column, numbers are strange things, and we do seem to attach unreasonable expectations to them.
It was no coincidence that the last trading day of the twentieth century was also the all-time high of the FTSE-100, which thereupon dropped sharply from a level that we have yet to regain even in nominal terms, never mind real terms. And it was in December 1989 that the Nikkei hit its all-time high of very nearly 40,000 before collapsing by two thirds. There’s something in a number that can make you feel the market has set itself a “target” which it then feels obliged to “fulfil”. Whatever the subsequent cost…..
Back to the Future
So here we are on this bright summer morning, with Britain’s economic growth outpacing expectations (as even the IMF grudgingly admits) and with UK unemployment down below yet another threshold. The US economy’s growth rates stalling a little, but nothing unusual. The Chinese economy likewise slowing, according to the IMF, but only to a mere 7%. And the Eurofirst and the S&P both up by 5-6% on the year. Everything to be thankful for.
Except that Iraq looks like falling apart, perhaps necessitating new US military action. Brent crude is back up to $114, a full 9% above early April’s level. The Ukraine gas issue remains unresolved. The European Union is locked in quite serious conflict about its whole political attitude. Travel companies have just been thumped by a ruling that they’ll have to pay compensation if the planes they hire are delayed. And the pound has just put on some unwelcome strength because of Mark Carney’s hint that we may be getting higher interest rates sooner than we think.
Is that a shadow passing over the sun? Please, somebody, tell me it isn’t. Major markets seem to be flagging this week after a long run. The talk of deflation in the euro zone won’t go away. And trailing p/es in the United States are all set to breach the sensitive 20 mark. The point at which the Shiller CAPE watchers will start screaming even louder about approaching armageddon.
But heck, those are just silly numbers, aren’t they?