The forces. Not the headlines.
Analysis and commentary on markets, companies, and the forces that move them.
The Dollar Cycle and Emerging Markets
The dollar's cycle of strength and weakness affects emerging markets more than most local factors do. The linkage runs through several specific channels, and their force differs across individual emerging markets.
Retail Share and Volatility Characteristics Across Markets
The proportion of retail trading in a market affects its short-term price behaviour and volatility characteristics. This structural difference explains why the intraday behaviour of some markets differs so noticeably from others.
How Index Providers Move Billions
Index providers do not manage money, and their decisions nonetheless direct hundreds of billions of dollars. That influence comes from the growth of passive investing, and its workings have several details worth understanding.
The Liquidity Reality of Frontier Markets
Frontier markets have a presence in indices and reporting that far exceeds their actual investability. The core of that gap is liquidity, and understanding the reality of liquidity matters more than assessing these markets' growth stories.
Comparing Transaction Costs Across Markets
Trading in different countries' markets can carry costs that differ by an order of magnitude, and most of these costs do not appear in the quoted price. Their cumulative effect on long-run returns frequently exceeds what investors expect.
Differences in Disclosure Quality Across Markets
The information companies disclose differs greatly across countries in quality, frequency and reliability. That difference directly affects the basis for investment judgement, and it is frequently underestimated.
What Global Diversification Actually Reduces
Global diversification is widely recommended, and which risk it actually reduces, and which it cannot, is frequently glossed over. Understanding that distinction precisely is the precondition for using diversification correctly.
Why Optimism Is Hardest to Recognise at the End of a Bull Market
That optimism peaks near market highs is almost self-evident in hindsight. The difficulty is that at the time, optimism never arrives dressed as optimism. It presents itself as a calm reading of the facts.
How Herding Changed Once Information Became Abundant
Herding has always been understood as copying what other people decide. Once the supply of information vastly exceeds anyone's capacity to process it, herding changes shape. What gets copied is no longer other people's positions but their attention.
How Social Media Alters an Investor's Sense of Time
Investing operates on a scale of years. Social media operates on a scale of minutes. When the second becomes the primary source of information about the first, the conflict between them does not stay at the level of information.
Everyone Endorses Long-Term Holding. Almost Nobody Practises It.
Long-term holding enjoys wider agreement than almost any other principle in investing, and a lower rate of practice than almost any other. The gap is not a failure of knowledge. It is built into the way the principle is stated.
What Actually Triggers Panic Selling
Panic selling is usually attributed to the size of a decline. Observed behaviour suggests the trigger is more often how long the decline lasts than how deep it goes.
Anchoring to Your Cost Basis
The cost basis carries less information about an asset than almost any other number in a portfolio, and is looked at more often than almost any of them. That contradiction explains a great many otherwise puzzling decisions.
How Losing Positions Get Reclassified as Long-Term Investments
The holding period for a given position is rarely settled at the moment of purchase. Far more often it is established retrospectively, once the position has moved against its owner.
The Overweighting of Expert Opinion
How reliable professional judgement turns out to be depends on what kind of feedback a field provides. Markets supply feedback that is slow, noisy and frequently misleading, which changes how experience accumulates there.
How a Narrative Replaces Analysis
A good story travels through a market far faster than a good analysis. The reason has little to do with diligence. Stories possess two properties analysis lacks: they survive retelling intact, and they can shed their conditions.
How Investors Rewrite Their Own Expectations
Memory works by reconstruction rather than storage. Every act of recall quietly revises the original expectation in line with what is now known. The process requires no intention to deceive.
Position Size and Emotional Intensity
Doubling a position does not double the emotional response. The response stays nearly flat below a certain threshold and rises sharply above it, and that threshold varies by person and is seldom measured.
Why Information Consumption Spikes During Declines
Readership of market information peaks during declines. The quality of market information reaches its low point across the same stretch. The coincidence in timing is no accident.
How Echo Chambers Harden Mistaken Views
Hearing the same argument repeatedly registers in the mind as independent evidence accumulating. Where the repetitions originate from a single source, the confidence that accumulates has nothing underneath it.
The Two Forms of Fear of Missing Out
Fear of missing out is usually described as an urge to buy into something. Its more common form appears in people who already hold the asset, and it is far better disguised.
Why Investors Remember the Calls They Got Right
Memory preserves forecasts selectively. Correct forecasts come with clear cues for recall. Incorrect ones lack any occasion that would bring them back to mind.
Paper Losses and Realised Losses
The same sum of money carries a different psychological weight on paper from the weight it carries once realised. The difference has no economic basis and influences decisions with great consistency.
Semiconductors: The Cycle Beneath the Technology
The semiconductor industry is shaped by long capital cycles, enormous fixed costs, and the lag between deciding to build capacity and having it. This structure produces its characteristic boom and bust.