2024-01-19: Markets

With some equity markets in the news for making all-time highs, you would think year-to-date results should look more exciting. The reality is that the investing world seems very divided and without firm convictions about what the next twelve months or so entail, regardless of whether such views are worth considering (they are not). Furthermore, there is a bit of hesitation after the strong run up in prices in November and December, with investors pausing to see if there will be a technical correction.
     The only thing everybody is focussing on are possible developments in the conduct of monetary policies across the world. As I have said before, this is not necessarily a healthy posture, but there it is. 

It amuses me to observe that people accept, though often without understanding, the laws of physics: no one tries to step out on a balcony and jump in the void flipping the arms in an attempt to fly. Yet the same people will gingerly flout some well-known facts relating to markets’ behavior and try to beat the indices, and some are even willing to go as far as paying considerable money in attempting to do so. And fail.
     It amuses me (less) to observe that a portfolio’s performance during a short period of time is taken as evidence that well-tested investment strategies are no longer working or have become outdated. Relationships between asset classes are not always stable, but give it a reasonable period of time and things usually go back to normal.
     It amuses me (much less) to observe the mislabelling or ambiguous phrasing used to describe successful single investments, especially in the private equity world. I received an email mentioning how ‘fund XYZ just made a successful exit returning 2-2.2x.’ I thought ‘I could have made an exit returning 9x on Friday.’ (1) Multiples bandied about without reference to the time frame and the capital tied-up in the program are meaningless and misleading. 

(1) if you wish to know what I’m referring to, write to me.

[Source: Axios]