Barring anything from left field, as Kath from Kath & Kim might say, “I feel it in me waters” that a stock market run up is about to happen. It comes as the Dow Jones hit a 17-month high overnight.
In fact, the index is up seven days in a row, which is its best run since August last year.
Of course, you would always want an investment tip that had more credibility than an “in me waters” call but there’s actually a body of scientific, or at least quasi-scientific work that says gut feelings actually have a pretty high degree of accuracy.
I still kick myself at ignoring my “water views” when it came to the market crash of late 2007. I was doing a road show for a major bank and I was asked to use the economics of the organisation’s chief economist.
His views on the economy roughly matched mine and I was happy to run with his charts but I pondered how the stock market could increase by over 20 per cent four years in a row and not have at least a correction.
When I asked about his forward P/Es for the overall stock market, he explained that’s what his numbers were telling him. Unfortunately, the sub-prime loan mess and the credit default swap problems were off the radar screens of chief economists’ analysis.
How could that happen? I don’t think many understood how these financial products had undermined the solidity of the global financial system’s foundations.
How come? I don’t think economists could believe that the world’s top bankers, their risk managers and their boards could have ignored a threat of this magnitude, but they did. I should have trusted “me waters!”
“The news on U.S. inflation is positive as it adds up to the Fed yesterday reiterating that it’s going to keep rates low for an extended period of time,” said James Dunigan, chief investment officer at PNC Wealth Management in Philadelphia, on Bloomberg. “The recovery is in place and by all evidence looks to be sustainable and at the end of the rainbow, that all filters down to corporate profits.”
As you can see “me waters” come from some pretty good sources, which are not as weak as, you guessed it, water.
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