Archive - Jul 2, 2012

From bull market gods and goddesses of the 1980s and 1990s, stock analysts now preside over a much more modest kingdom.  Nic Colas, of ConvergEx notes that the world has moved on to new golden calves, from currencies (with great leverage) to exchange traded funds (with generally less volatility) to macro analysts (the current Zeuses and Heras).  This even extends to the world of the retail investor – there are far more Google searches in the U.S. for "Storage auctions" (246,000/month) than for "stock research" (just 33,000/month), and the rate of decline resembles a fast-decaying radioactive particle. With asset price correlations near 90% for a wide range of investment choices, the on-off switch to market direction sits in Washington, Frankfurt, Beijing, and other centers of political and central bank power. Nic believes stock research will make a comeback for both technological (systemically delivering information to algorithmic traders) and cyclical reasons - as old-school stock research, with sector analysts, is ultimately tied to the fortunes of the equity market. And for analysts and stock market investors, that inflection point cannot come too soon.