Contributing Member of the Financial & Business Services Councils

Names and details of certain GLG News authors are available only to GLG Clients and Council Members. GLG News authors are subject-matter experts within the GLG Councils and are available for expert consulting - by phone, in-person, or written analysis. To find out how to become a GLG client or Council Member, click here.

GLG News by this Author

Analyses are solely the work of the authors and have not been edited or endorsed by GLG.

GLG News is now G+ Insights

G+ is a community for professionals, academics and entrepreneurs to connect through online discussions and in-person meetings. You will continue to see G+ Insights (formerly GLG News) here as well as on the G+ website, where you can share and discuss the G+ Insights you read.

Down market is not an out market

June 3, 2009

Analysis of:Investing in a down market | www.triplepundit.com

Market is in dynamic equilibrium of perceptual momentum and gravitational pull of fundamentals; A simple downturn is a state of glut in supply but impairment of demand; But in the era of tertiarization, monetization and derivatives even without underlying, downturns are not so simple. Unsustainable exuberance creates bubbles, particularly asset bubbles. On consolidation the bubbles start bursting. The heat and dust create cascades, which gather momentum. This results in recession, panic reaction, Government interventions, often meaningful but more often misplaced bailouts, labour market shrinkages and shifting of consumption bundle. Consumers try to leap into liquidity preference. cash or cash equivalent becomes the king. Return of capital becomes more important than return on capital. Investors switch their preference to guaranteed financial products irrespective of IRR of return. Commonality of intentions prevail resulting in discernible herd mentality. Investment pipeline dries out.

Page : 11 to 1 of 1

Subscribe to Updates

By RSS