My share portfolio jumped up by 1.3% yesterday. But the national media news was full of gloom on energy prices and the drought. The NHS is collapsing and the war in Ukraine continues. Bad news has always sold newspapers and the same goes for clicks on social media channels. I have the feeling I am living in some alternative universe where economics and the stock market are completely uncoupled.
The same thing happened after the gloomy prognostications of the Governor of the Bank of England. It’s rather like the “Backwards” episode of Red Dwarf where everything was in reverse and time ran backwards.
All this bad news is surely going to have an impact sooner or later. Come winter many people won’t be able to heat their homes and the coming recession will mean many people will become unemployed. This might put a damper on inflation but the stock market cannot stay immune from these economic trends for ever.
It reminds me of the infamous comment by Chuck Prince just before the financial crash of 2008 – “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance”.
I may be sceptical about future prospects for shares, particularly those in certain sectors, but I won’t be selling shares just yet. I will continue to follow market trends as always until I think valuations are completely irrational on individual stocks.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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