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08-04-2017, 06:21 PM
Man or machine, both manufacture market bubbles
The rise of algorithm-driven trades carries risk, especially when a price correction may be afoot
by Nizam Idris For the Straits Times
PUBLISHEDAPR 8, 2017, 5:00 AM SGT
Bubbles, I've seen a few, which swelled and popped in familiar cycles during my 20-odd years in the finance industry.
One arose from a belief that the Asian miracle was unassailable despite ridiculous valuations and a broad gap between savings and investments; another was due to a dot.com frenzy; and the most recent was a global housing-market bubble. The mantra in the early 2000s was "buy land, they don't make it anymore" - which led to an all-mighty pop that triggered the 2008 global financial crisis.
The global economy grew at 3.1 per cent last year, and the International Monetary Fund (IMF) expects the rate to accelerate modestly to 3.4 per cent this year. This would still fall well short of the pre-crisis average of 4.3 per cent.
Yet, today, most global stock markets are again pushing historical highs, even as the world economy struggles to hit escape velocity and conclusively consign the global financial crisis to the history books. The more things change, the more they remain the same.
Nine years after a bubble bursts, a new one invariably starts to emerge.
More details in http://www.straitstimes.com/opinion/man-...et-bubbles
The rise of algorithm-driven trades carries risk, especially when a price correction may be afoot
by Nizam Idris For the Straits Times
PUBLISHEDAPR 8, 2017, 5:00 AM SGT
Bubbles, I've seen a few, which swelled and popped in familiar cycles during my 20-odd years in the finance industry.
One arose from a belief that the Asian miracle was unassailable despite ridiculous valuations and a broad gap between savings and investments; another was due to a dot.com frenzy; and the most recent was a global housing-market bubble. The mantra in the early 2000s was "buy land, they don't make it anymore" - which led to an all-mighty pop that triggered the 2008 global financial crisis.
The global economy grew at 3.1 per cent last year, and the International Monetary Fund (IMF) expects the rate to accelerate modestly to 3.4 per cent this year. This would still fall well short of the pre-crisis average of 4.3 per cent.
Yet, today, most global stock markets are again pushing historical highs, even as the world economy struggles to hit escape velocity and conclusively consign the global financial crisis to the history books. The more things change, the more they remain the same.
Nine years after a bubble bursts, a new one invariably starts to emerge.
More details in http://www.straitstimes.com/opinion/man-...et-bubbles
Specuvestor: Asset - Business - Structure.