My mind turns today towards the volatility and performance of markets over the past couple of decades. Volatility is a speculators delight but a business person’s nightmare. Lack of even short term stability prevents markets from being efficient – let’s face it how can a hundred prices an hour all accurately reflect the future earning potential of that company? Looking at some charts –you have to love Google – it is clear that volatility is increasing not reducing. That’s interesting in itself. We could kid ourselves that the world is becoming increasingly unstable – but it was pretty unstable in the first half of the last century – i mean those were some pretty serious wars! No I think electronic trading and increasingly opaque instruments have allowed this to happen – oh for the days of real business and the Medici. Not everyone is convinced that we live in a time of increasing volatility – and it matters how you measure it. Actual movements are fairly meaningless but percentage movements and measures of SD reflect more accurately changes in the market (100 of a 5,000 sounds dramatic but is less than 25 of 1,000). And it hits some sectors worse than others. Somewhat ironically it is financial services themselves that are most volatile .................
Dr Bryan Mills
"There he goes. One of God's own prototypes. Some kind of high powered mutant never even considered for mass production. Too weird to live, and too rare to die" Hunter S Thompson describing the author in 1971.