April is the cruellest month

FINANCIAL MARKET

"APRIL is the cruellest month, breeding Lilacs out of the dead land, mixing Memory and desire, stirring Dull roots with spring rain. Winter kept us warm, covering Earth in forgetful snow, feeding A little life with dried tubers."

Whilst I very much doubt TS Eliot was writing about the financial markets, he could have been. In April 2010 and 2011, the market started to correct and on both occasions investors saw ten percent or more wiped from their portfolio valuations.  Markets have sold off again in the first few weeks of this month and the question now is whether 2012 will see history repeat itself. Let’s consider the activity of equity and bond investors. Until recently, equity market investors have broadly remained in ‘risk-on’ mode, although the blanket euphoria witnessed earlier in the year was replaced by...