Capitalogix

Here is a Map Showing Countries Scaled Based on the Size of Their Stock Markets

There has been a lot of news lately about global markets ... and how something that happens in one affects the others.

This chart is interesting because it puts the world's markets in a different perspective.

It shows the world according to free-float equity market capitalization in billions of dollars measured by the MSCI. 

   

 

From BofAML’s Transforming World Atlas. 

The US, with a market cap of $19.8 trillion, is the biggest and represents 52% of the world's market cap. Japan is in second place at $3 trillion, followed by the UK at $2.7 trillion, and then France at $1.3 trillion.

Notably, Hong Kong's market cap is nearly the same size of China (both of which are significantly smaller than countries like the US and Japan). 

Meanwhile, Russia, which has a bigger surface area than Pluto, is about the same size as Finland in terms of market cap.

Interesting.

Putting This Market Decline in Perspective

How bad was the recent decline?  It was the biggest since 2011.

To put it in better perspective, here is a chart (based on daily closes) showing significant S&P 500 Index declines since the all-time high prior to the 2008 Bear Market.

The area with the pink background highlights the "Bear Market" area beyond the 20% decline mark.

    

via Doug Short, Advisor Perspectives.

 

Buy and Hold investors must stomach significant drawdowns to get their returns — even in 'good' years.

The chart below shows S&P 500 intra-year declines compared with calendar year returns. The bars represent year-end returns since 1980, while the reddish dots mark each year's market low.

 

 

via JPMorgan Guide to the Markets.

 

According to Business Insider, here are the historical frequencies of certain market correction levels.

Since 1900, we've seen:

• 5% market corrections: 3x per year.
• 10% market corrections: Once per year.
• 20% market corrections: Once every 3.5 years.

The point is that 10-15% pull-backs are normal (and perhaps even healthy) for the market.

Interesting.

The New New - Something Interesting Is Happening

The game is changing.  That means what you have to do to win is changing too.

Take a look at this.  

  

 

One of the most important phrases I’ve learned to use in business is “… or something better."

Too many times, we have a specific idea of what we want - and how we want it.  Unfortunately, that focus can cause us to miss other (often better) opportunities.

The same is true for people in the roles they play and the things they do. Too often, we fall into a rut and focus on the activities and efforts that we've planned (or have always done), instead of what's possible or preferable.

One of the values that I stress here at Capitalogix is that the best way to grow the business is to grow the people. That sounds strange because so much of our business is based on technology. But the point is to continue to automate, delegate, or outsource things that we used to do … so that we can do something better.

Something to think about!

The Market's Slow Roll-Over Just Accelerated

On Friday, Aug. 21, the Dow Jones Industrial Index fell below 17,000.  That means the Dow has now shed well more than 1,700 points in just 90 days. The day before was the S&P's worst day in 18 months. 

Things look like they are moving fast.  But, for the past several months, the US markets have s-l-o-w-l-y rolled over -- with the Dow leading the way.

Lots of people are talking about the "Death Cross" that occurred on the Dow's daily chart early last week (when the 50-day simple moving average moved below the 200-day average).  What led up to it?  Here is a chart from a week ago.

  

 via StockCharts.com

When a market rolls over slowly like this, the first thing to go is the uptrend's momentum.  

To see this market's declining momentum, note that MACD (shown in the upper indicator window) has been moving lower for months.  

The next thing that happens is increased interaction with the 50-period moving average.  Followed by tests of the 200-period moving average.  Then comes a definitive break below the 200-period average and then finally the "Death Cross" occurs - which is where we are at with the Dow.

A longer-term weekly chart shows the slow "text-book" roll-over from a different perspective.

 

  via StockCharts.com

The 40-period weekly moving average corresponds to a 200-period daily moving average.  

This drop takes us back to levels seen at the start of 2014.

Even though the current trend is clearly down, we are approaching a likely decision zone.  If we don't get a bounce here, the election season will be a different game.  

What do you think happens next? 

Some Links for Your Weekend Reading

California's Drought is creating a new Gold Rush.

 

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• How Machine Learning Will Fuel Huge Innovation Over The Next 5 Years. (VentureBeat)
• Truths & Illusions: The Profound Importance of Thinking Fast and Slow. (HuffPost)
• Why Sadness Lasts Longer Than Other Emotions. (BPS Research Digest)
• George Zimmer on His 'Uber for Tailors'. On-demand tailoring service. (Esquire)
• When ‘Moneyball’ Meets Medicine. (NYTimes) 

 

Trading Links:

• Dear Future Self, Are you Rich? Are You Wealthy? (Medium)
• Eight Reasons You Make Bad Financial Decisions. (The Guardian)
• Supercomputers Make Discoveries That Scientists Can't. (NewScientist)
• Billionaires Versus Big Oil. Betting on new tech that could displace fossil fuels (Fortune)
• Jamie Dimon Is Now a Billionaire, and He Got There in an Unusual Way. (Bloomberg) 

Here Are Some Links For Your Weekend Reading

The Democrats' Dream Ticket is really about Republicans ... Imagine if Trump and Palin ran together.

 

   

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• 20 Leadership Experts Share Their Best Leadership Tip. (Inc.)
• How to Motivate Yourself: 3 Steps Backed By Science. (Read)
• Cowboys to Use Virtual Reality in Practice & Film Study. (ESPN & Engadget)
• Just Say No To Digital Hoarding. (Washington Post)
• Amazon Says That It Now Adds Computing Power On a Daily Basis That’s Equivalent to Its Entire Capacity Just 10 Years Ago. (The Atlantic) 

 

Trading Links:

• Five Top VCs Predict The Future. (Forbes)
• Bitcoin Index Called 'Stepping Stone' For Currency. (CNBC)
• Wall Street, Meet Block Chain — Investing 2.0. (Medium)
• IMF Paper Finds That Too Much Finance is Bad for Growth. (NakedCapitalism)
• Cashless Society: This country wants to ban the use of cash in stores. Economists love the idea of a cashless society. So, increasingly, do consumers. (Fortune) 

Market Confidence Remains High Despite Glitch

An offline N.Y.S.E. barely made a ripple in a day’s trading a few weeks ago.  

Moreover, industry research indicates that confidence in the US Equity Market Structure is at a 5-year high, with 64% of the respondents having “High/Very High” confidence and 18% responding “Neutral.”

In years past, a shutdown like that might have stopped Wall Street dead in its tracks, with a broad range of companies’ shares sitting frozen until all technical problems were unwound.

But as the lengthy stoppage showed, the modern world of stock trading is much quicker, more complex and reliant on sophisticated computers — and in many cases able to adapt to issues that could have proved disastrous to the financial markets and the investors’ holdings.

To put it in perspective, NYSE-listed (Tape A) stocks account for approximately 53% of US National Market System (NMS) stock volume. 

Below are industry and Tape A market share metrics for Self-Regulatory Organizations (SROs) for the first six months of 2015. NYSE accounts for 23.2% of NYSE-listed stocks and 12.3% of overall equity volume.

 

 

via Tabb Forum.

Weekend Links

Hillary Clinton may have to deal with more fall-out from her deleted e-mail fiasco.

 

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• The Economist Explains: The End of Moore's Law. (Economist)

• Big Data Explained in Less Than 2 Minutes - To Absolutely Anyone. (DSC)

• A Preliminary Taxonomy of the Voices Inside Your Head. (Digest)

• Disney’s Research Lab Figures Out How To Put Words In Your Mouth. (TechCrunch)

• 'What I Would Tell My 20-Year-Old Self'.  (Fortune)

 

Trading Links:

• Tech Boom 2015: What's Driving Investor Insanity? (Forbes)

• This Is Your Brain on Money: How Investors Trip Themselves Up. (WSJ)

• These 2 Simple Slides Show Just How Hot FinTech Is Right Now. (BizInsider)

• Soros Says China Is Major Risk For World War 3. (ValueWatch)

• China’s Yuan Has ‘Long March’ To Reserve-Currency Status. (MarketWatch)

China Tries to Prevent a Market Crash

It has been a tough several weeks for Chinese markets.

As such, the Chinese government has taken some extreme measures to intervene and minimize the selloff.

Some of these measures include more than half the companies on the exchange "voluntarily" suspending trading.

But, it has not worked yet.

    

via WSJ.

 

Stratfor posits:  Beijing has an underlying interest in ensuring that China's stock markets do not collapse, even though any intervention risks exacerbating whatever financial and political fallout may come from an eventual market decline or crash. Therefore, the government will likely continue to intervene to the best of its ability, propping up markets and market sentiment whenever the risk of a major sell-off becomes too great.

This does not mean that stock prices won't slide further, or that the market will stabilize — indeed, it could well become even more volatile over the coming months. Until Beijing invents more avenues for investment, or unless it embraces interest rate hikes and any post-crisis restructuring, it will have to rely on the few tools available to ensure that citizens can generate the wealth and financial security they need to consume.  

 

Here Are Some Links For Your Weekend Reading

So, are you conflicted about Trump running for President?  

 

 

Good for entertainment ... Just not sure how good it will be for the country?

 

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• How to Use the Gratitude Advantage at Work. (Michael Hyatt)
• Microsoft Study Shows That Tech Is Shortening Your Attention Span. (Engadget)
• What 5 Days of Junk Food Does to You. (Time)
• The U.S. Army is Testing a Real-Life Ray Gun. (The Week)
• Science Fiction writer, Warren Ellis, Answers Your Questions about the Future. (WN) 

 

Trading Links:

• An Offline N.Y.S.E. Made Barely a Ripple in a Day’s Trading. (NYTimes)
• Are CTAs Good for a Diversified Hedge Fund Portfolio? (FINalternatives)
• The Rise of the Trader-Bots. (The New Yorker)
• Unravelling Capitalism's Hidden Networks Of Power. (New Scientist)
• The Economics of Polo, the Sport of Kings. (Forbes)