HANDS up everyone who thinks today's stock markets are totally bonkers. Right, that's all of us.
The JSE hit a record high this week, the Dow is up 1000 points since June and Allan Gray continues to say we're all going down the lavvy.
Nothing new to report, then. We've seen this movie before, but none of us remember how it ended. We've blanked it out, in sheer horror of the memory. (It was bad, very bad, but then it got better. Allan Gray still made pots of money.)
We get so caught up in the billowing clouds of the "macro" picture that we forget the grinding dynamics that make markets work.
Yes, the endless recession and the prospect of more cash injections from the US Fed and European Central Bank weighs on the minds of the experts, but in the back rooms the real moneymakers are running the show.
In the past few weeks we've heard a lot about algorithmic trading machines, but mainly about how a rogue program managed to wreck one large brokerage, Knight Capital, by buying high and selling low.
We accept very little good news - I suspect because we've become masochists and don't want to listen. (South Africans, in particular, revel in bad tidings. When I was a kid the homily was alles sal reg kom; now it's alles is kak.)
It may not all come right in the end, but it's not as vile as we make it out to be. Is it?
High-speed robots rule the world right now. Apart from the odd calamity, they're keeping their end up - although we may look on aghast as the machines make micro-profits every millisecond, trading among themselves, feeding on every dip and blip of a market they themselves make.
Global stock exchanges (and it would be naive to think the JSE is immune) are prey to bizarre momentum-style trading patterns that are as far removed from humans (and their beloved fundamental analysis) as it is possible to be.
But that's the way it is.
When Bank of America released its quarterly results to the end of June, it reported "positive trading-related revenue" for 95%, or 60 of the 63 trading days, in the period under review. (A shocking result, actually, since in the previous three months the bank recorded a 100% hit rate - it made zero daily losses.)
That wasn't a bunch of dudes in yellow braces smart enough to make such profits. Those days are long behind us.
So what to make of the recent stock-market run? The one that's making us all so happy, and so nervous?
Not everyone agrees we've got robots to thank. An old hand in the trading business, one David Penn, a pundit on marketwatch.com, reckons it's a SCREAM - "Short-Covering Rules Everything Around Me".
Penn sees a worldwide shift in sentiment from fear to relief: instead of betting on the market going down, traders have hurried to cover their short-sales (thus buying back stock) and in so doing have sparked a thundering rally.
Meh. In the dark heart of a trading algorithm, nothing hears or heeds a mere human scream. Whoops, maybe we should brace ourselves ...
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