Redwood: How to negotiate an irrational summer

GLOBAL

The poor daily market commentators have to explain why a market is rising or falling, when there is no impeccable logic the trained eye can see.

We had such a period in late June, when world stock markets fell sharply on a supposed change of strategy by the Federal Reserve in the US. All Mr Bernanke said was the obvious, that the US’ programmes of quantitative easing would not go on forever. No sane analyst thought it would. He further said if the US economy is still strong later this year and looks well set, he will first taper the amounts of bond buying he is doing and eventually end them. Maybe the market traders were bored, or maybe they just saw an opportunity to make money by being bearish. The story went round that e...