What investors forget – correlation!!!

It’s really hard to miss the recent global stock market crash unless you’ve been living under a rock.

For all investors wondering if they had missed an opportunity to participate in the stock market rally in the last couple of months, a peek into the charts of some equity benchmarks should provide a relief.

S&P 500

Untitled

Nifty 50

Untitled

FTSE 100

Untitled

Nikkei 225

Untitled

Let’s throw in another emerging market chart for good measure…

Kospi

Untitled.png

Charts Source: Bloomberg

What you’ll notice is that all of these markets have been driven higher over the last year, finally hitting all time highs in late January 2018.

Before deciding on investing in equities or for that matter in any other asset class, investors need to remember that global markets are highly correlated and what started off as a rally in the US stock markets post Trump’s victory in November 2016 quickly spread to other equity markets over the course of 2017. And the market fall has been just as contagious. The correlation between equities and bonds can be for another post.

Most markets indices are trading above their long run average PE and investors will need to look for specific stocks in order to find value.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s