More money has probably been lost in timing the stock market than in corrections in the stock market. That seems to be the case again this year. After a tough 2022 investment year and a difficult December, investors were cautious early in the year and, in fact, they still are, given all the cash on the sidelines. The vast majority of economists predicted a recession. That recession did not materialize and, despite the banking crisis and the hassle surrounding the debt ceiling, the likelihood of it has clearly diminished. However, the stock market is carried by only a few companies that are benefiting from the hype in artificial intelligence. Now, the impact of artificial intelligence on the stock market and economy is at least as big as the Internet or the iPhone, nor is it something limit

The Bank of Japan has a new governor, Kazuo Ueda, and two weeks ago he held his first press conference. The result was a rising stock market and a falling yen. Ueda promised to be cautious about policy adjustments. That policy consists of a price ceiling on 10-year interest rates. The Bank of Japan buys up all bonds above that price ceiling. Normally then the market does the work for the central bank and interest rates do not rise above that price ceiling. But since the Bank of Japan raised that price ceiling from 0.25 percent to 0.50 percent in late December, there has been plenty of speculation since then that the Yield Curve Control policy is finite. For now, the surprise that interest rates will remain low for a little longer was good news for the stock market, less good for the yen. T

Although there is a tentative agreement between President Biden and Speaker of the House McCarthy, it must still be ratified by Congress next Wednesday. The problem is that the Republican party does not exactly speak with one voice. Fifteen rounds were needed just to elect McCarthy speaker of the house. Already 78 times the debt ceiling of the United States has been raised. The U.S. Constitution states that only the U.S. Congress may determine how much the U.S. government can borrow. Therefore, until 1917, every U.S. government loan had to be approved by Congress, but since the Second Liberty Bond Act of 1917, only the maximum size of the debt is set by Congress. If the president and Congress are of the same colour, an increase is a hammerlock. Similarly, when there is a Republican preside

The problem with such assumptions is only really a problem when those assumptions are enshrined in laws and regulations. One example I have frequently devoted a column to in recent years was the end of the neutral portfolio. For years, the neutral portfolio (50/50 or 60/40) was a much better investment than just shoving all your assets into the stock market, but because risk profiles are laid down in laws and regulations, at a certain point people only invested in (government) bonds because the same laws and regulations required it, something that simply cannot be changed quickly. Of course, there were possibilities to deviate even then, but in supervisory land, it is risky to stick your head out of the sand. If laws and regulations go wrong, they can quickly create systemic failures and t

The sentiment is at a low, some sentiment indicators cannot fall any further. Sentiment indicators are relatively good for determining a bottom in the stock market, much better in any case than for determining a top. Negative sentiment is much more contagious than positive sentiment and therefore highly clustered. These situations are usually relatively short-lived, whereas positive sentiment can last for a longer period. Anyone who had invested on the basis of sentiment indicators in the past twenty years could almost always have done so at the bottom.Against such a strong track record, there seems little else to say but that this time it is different, a dangerous statement in the financial world. But things are indeed different this time than in previous corrections. Since 1928, there ha

Ultimately, the strength of a currency depends on the strength of its underlying economy. Norway, as a major energy producer, has a strong economy and therefore a strong currency. Recently, the Norwegian currency has weakened remarkably, especially against the euro, to its lowest level in three years. Now there are many factors that influence the development of currencies and often it is only in retrospect that it is clear which factor was the deciding factor. As an energy producer, the Norwegian currency is somewhat more strongly linked to the dollar and thus to oil price developments, but this is not enough to explain the fall this year. However, a significant portion of the energy revenue is invested through the Norwegian Oil Fund, which after all amounts to swapping the Norwegian krone

The global equity market is only just below its highest point ever. This is probably caused by the rotation out of bonds and even cash into equities. This is because the real interest rate (interest minus inflation) is so negative that investors are, as it were, fleeing in equities. Contrary to bonds or a savings account, companies are able to compensate for inflation, which is also demonstrated by the strong rise in producer prices. In the last quarter of last year, the US economy grew (annualised) by a nominal 14 percent. This year, nominal growth of 9 percent is still expected. The extremely negative real interest rate is also undermining purchasing power. This phenomenon can also be seen in countries like Venezuela or Argentina, as soon as hyperinflation occurs. Then these stock market

The first quarter was a troubled one. The positive start was mostly a reaction to the extreme negativism in December month. Sometimes things in the stock market are simple. When everyone is negative, the stock market can only go one way and that is up. That was the case at the end of December. As many as 85 percent of economists were counting on a recession, and the sentiment indicators swung to the extreme negative. Even if fundamentally things are not going well, that makes it a good time to get in. During the quarter, it appeared that the economy was doing so well that the recession scenario had to be moved to 2024 or even beyond. The flip side of that is that the inflation numbers did look stronger than had been anticipated. Now there are the necessary one-time effects and adjustments