As it happens, that hasn’t proved the case this year – despite early-day wobbles, both the S&P 500 and FTSE All-Share ended post-daylight saving changes in the green. Indeed, while seasonal anomalies do occur with regularity, they do not always occur (and some academics dispute whether they happen at all) and therefore traders shouldn’t adjust their behaviour to take advantage. Instead, say the authors of the study, we should recognise that seasonal factors can affect our mood, and in response avoid making important financial decisions at these times of heightened emotion.
Easier said than done, perhaps. Clock changes aside, heightened emotion is something that is hard to avoid at the moment. Geopolitical tensions are rising, bringing with them a new threat of trade wars, cod wars and cold wars. And those tensions are seeping into the markets, which have suffered heavy falls over the past two months, exacerbated further by another looming threat: data wars. Even if you still consume your news in the old-fashioned way, the news of the recent scandal over misuse of personal data at Facebook cannot have escaped your attention. The social media giant has lost 14 per cent of its value since the revelations, and there are concerns that, should angry users abandon the platform – #DeleteFacebook – its plight will worsen further still.
We have a more general worry about so-called technology companies like Facebook, because – as we explore in this week’s cover feature – they have come to dominate such a large chunk of the market and as money flows into exchange traded funds (ETFs) form an ever-more important driver of the indices that underpin them, but with scant regard as to whether they can live up to their valuations. It may be over-emotional to suggest that a new dot-com crash could follow this apparent feedback loop – but it is a theory worth more investigation than the cursory dismissal the ETF industry has so far offered.
