The volatility in US equity markets appears quite elevated intra-day to this humble observer, with Dow moves of 100+ points a regular occurrence. Sitting mostly in cash and far away, it seems like a not-so-subtle shift is underway. With Switzerland abandoning the Euro-peg, the ECB’s QE and Wall Street shrugging off the Fed’s usually palliative rap, this has been an eventful month. Earnings season is telling, many large-caps earnings are suffering from a strong dollar and money seems to want to hide in domestic retail and the IWM. The market response to Amazon’s beat and Alibaba’s miss (imagine that) hints at the prevailing confusion. Cheap oil is generally good right? The Fed on hold is generally good right? So why is the market in a funk? If January mirrors the rest of the year as Street adages have it, short term traders should be happy.
Indian equity markets are a different story. Post budget I wonder if the bloom comes off this rose too. While policy makers bemoan the lack of retail investor participation, this kind of volatility makes a mockery of “investing.” Several teams from IIM-B are participating in a Bloomberg-run stock market competition and collectively they hold the TOP spot. Nice, though I had nothing to do with it. Saw a piece the other day showing that stock market competitions correlate positively with financial literacy. I am not a big fan, since such competitions can’t teach you about investing. After all, trading with paper money makes you go for broke because you can’t (go broke). But it gets you interested doesn’t it.