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September 04, 2006



Doesn't every sale require a buyer or am I missing something blindingly obvious in Kaletsky's arguments ? Presumably the people buying stock in the summer are acting unconsciously...

Tim Worstall

Quick question.

Do the markets in the southern hemisphere have the same winter/summer behaviour? Or are they in lockstep with northern markets?


Tim - I quote from my day job:
"In the last 33 Septembers [the worst month for the UK market] the Aussie market has out-performed the UK one by an average of 0.94 percentage points in local currency terms - and it's done so in each of the last 8 Septembers."
The Kamstra paper I link to gives more data.
I emphasize relative returns here because of course a tumble on Wall St would hurt Aussie stocks.

Tim Worstall

So a set of options to provide a spread (or a straddle, or a butterfly? sorry, way out of date with these terms) might be interesting then? Call on Aussie, put on UK or Wall Street one season then reverse for the other 6 months of the year?

Guido Fawkes

Currency risk Tim.


It's none of those terms, which apply to different types of positions taken on the same underlying stock, index or whatever.

Currency risk could be handled separately.
But you would have to leverage rather a lot to get a decent return out of that underlying 0.94%!


"you gain a reputation as a great thinker not by writing great truths, but by flattering your readers": are you flattering us by implying that we're the sort of sharp, sceptical types who'll see the wisdom in that?


Its a case of making up a complex story to explain something relatively straightforward - everyone's off on vacation or can't be arsed working!

I recently had a lengthy chat with a city economist about the kind of work they do.

They said that many of their economists made efforts to present alternative 'angles' on macroeconomic or market changes, looking at presenting investors and clients with some kind of new, interesting insights. Now this was interesting to me, and being a government economist myself, smacks of the art of "making stuff up" with the aid of powerpoint or excel charts.

Its the preoccupation with trying to provide new insights or say smart things, rather than provide robust explanations, that Kaletsky seems to be following here.

Personally, I never really look for analytical insights from journos - they have none. I just look for the news of what's happened.

Having said that I am about to start work in a think tank, so I'll probably be joining the "interesting angle" brigade very soon. Keeps us economics types in work.

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