How much more will global stocks fall? As world stocks purge June’s lows, that question is vexing investors worldwide.
Pundits overwhelmingly envision much more downside until we hit “capitulation” — a famous phrase meaning cascading panic selling.
Yes, capitulation is the most common end to bear markets. But not always. One big factor makes that ending unlikely now. Let me explain why.
The capitulation thesis implies investors aren’t fearful enough.
Usually, bear market bottoms terminate with violent selling that relentlessly yanks money from stocks in favour of “safe havens” such as bonds, gold and cash.
Stock fund outflows surge as demoralised investors’ last hopes vanish — the moment of capitulation.
That is the typical process, although capitulation is only ever clear in hindsight. And, yes, we haven’t seen that this year — yet. After all, the peak-to-trough drop in stocks so far is 26 per cent, which is considered a minor bear market.
Despite many sentiment surveys, including the American Association of Individual Investors Bull/Bear study, and global fund manager surveys hitting extreme lows lately, fund outflows have been muted.
By the end of September, US investors had pulled $29.4 billion from stock funds. Sounds high? Consider: the week of March 27, 2020, as stocks hit their Covid-19 lockdown low, US investors dumped $41.8bn in stock funds. Pessimists conclude panic selling awaits us.
But rote reliance on historical norms is always a mistake. Average isn’t always. History is very useful in analysing a range of probabilities, but it isn’t a road map or destiny. It doesn’t show that if A happens, then B always follows.
Potential likelihoods are just a start. Then you compare current specifics with history’s specifics. That is where the “no capitulation yet” thesis goes wacky.
A handful of past bear markets, including those in 1966 and 1982, illustrate that they don’t always cease in capitulation — ending without panic selling.
Why does now look like another example? When the usual “safe havens” don’t seem safe, dumping stocks for things that also seem pretty risky is pointless. That is largely the situation in 2022.
Consider bonds. Most global investors target US Treasuries as a haven. Yet the ICE BofA US Treasury Index is down 17.9 per cent from August 2020 highs, while long-dated Treasuries have plummeted 40 per cent — as bad or worse than stocks.
Beyond the US, Bloomberg’s Global Aggregate Bond Index, a 24-nation gauge of corporate and government debt, is down 24.7 per cent from January 2021’s high, nearly matching the decline in global equities.
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Watch: US Federal Reserve chief warns of 'pain' in reducing inflation
With most people convinced that interest rates must rise from here, meaning prices would fall, it is no shock that year-to-date bond fund outflows dwarf stock outflows.
Of course, inflation fear is ubiquitous, which would eat into the value of bonds.
That also applies to cash. Why pile into cash when it pays little and will be worth 10 per cent less next year?
Because banks are overly flush with deposits, they don’t need to lure even more with higher rates.
Most UAE savings accounts yield between zero and 2 per cent, according to personal finance website Yallacompare.
In the US, the average is 0.17 per cent and high-yield savings accounts hover around 2 per cent. Those rates are staunchly negative via inflation. That means exiting stocks, where returns could be negative ahead — or not — for an assured real loss.
For years, I have called the stock market 'The Great Humiliator' — it wants to fool as many as possible … for as long as possible … for as much money as possible
Ken Fisher,
founder, executive chair and co-chief investment officer of Fisher Investments
Gold, arguably history’s most famous “safe haven” of all, would be glowing now if myths about it hedging inflation, bear markets and chaos were true.
But, as The National recently wrote, it isn’t. After shining through early March, gold has fallen 19.9 per cent, far exceeding the 13.6 per cent drop in global stocks over the same time span.
Think crypto is the new gold, as many argued pre-2022? Bitcoin’s 71 per cent plunge from November 2021 ensures that crypto is no safe haven.
Feel like bolting? OK! But with basically nowhere safe, liquid and easy to run to and hide, we probably won’t see classic capitulation this time — no mass exodus from stocks to what are now not-so-safe havens.
It should look more like 1966 and 1982.
For years, I have called the stock market “The Great Humiliator” — it wants to fool as many as possible … for as long as possible … for as much money as possible.
A new bull market stealthily starting as most await capitulation would do just that. Of course, no one can ever be sure. But when most are pessimistic and fearful, it is a time to be optimistic and greedy. That is today.
Ken Fisher is the founder, executive chair and co-chief investment officer of Fisher Investments, a global investment adviser with $160 billion of assets under management
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Abu Dhabi Card
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Specs
Engine: Duel electric motors
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The Greatest Royal Rumble card as it stands
The Greatest Royal Rumble card as it stands
50-man Royal Rumble - names entered so far include Braun Strowman, Daniel Bryan, Kurt Angle, Big Show, Kane, Chris Jericho, The New Day and Elias
Universal Championship Brock Lesnar (champion) v Roman Reigns in a steel cage match
WWE World Heavyweight ChampionshipAJ Styles (champion) v Shinsuke Nakamura
Intercontinental Championship Seth Rollins (champion) v The Miz v Finn Balor v Samoa Joe
United States Championship Jeff Hardy (champion) v Jinder Mahal
SmackDown Tag Team Championship The Bludgeon Brothers (champions) v The Usos
Raw Tag Team Championship (currently vacant) Cesaro and Sheamus v Matt Hardy and Bray Wyatt
Casket match The Undertaker v Chris Jericho
Singles match John Cena v Triple H
Cruiserweight Championship Cedric Alexander v tba
Results
57kg quarter-finals
Zakaria Eljamari (UAE) beat Hamed Al Matari (YEM) by points 3-0.
60kg quarter-finals
Ibrahim Bilal (UAE) beat Hyan Aljmyah (SYR) RSC round 2.
63.5kg quarter-finals
Nouredine Samir (UAE) beat Shamlan A Othman (KUW) by points 3-0.
67kg quarter-finals
Mohammed Mardi (UAE) beat Ahmad Ondash (LBN) by points 2-1.
71kg quarter-finals
Ahmad Bahman (UAE) defeated Lalthasanga Lelhchhun (IND) by points 3-0.
Amine El Moatassime (UAE) beat Seyed Kaveh Safakhaneh (IRI) by points 3-0.
81kg quarter-finals
Ilyass Habibali (UAE) beat Ahmad Hilal (PLE) by points 3-0
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
Company%20profile
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Ain Issa camp:
- Established in 2016
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- Of the adult population, 49 per cent men, 51 per cent women (not including foreigners annexe)
- Most from Deir Ezzor and Raqqa
- 950 foreigners linked to ISIS and their families
- NGO Blumont runs camp management for the UN
- One of the nine official (UN recognised) camps in the region
Singham Again
Director: Rohit Shetty
Stars: Ajay Devgn, Kareena Kapoor Khan, Ranveer Singh, Akshay Kumar, Tiger Shroff, Deepika Padukone
Rating: 3/5
Scores
Day 2
New Zealand 153 & 56-1
Pakistan 227
New Zealand trail by 18 runs with nine wickets remaining
Auron Mein Kahan Dum Tha
Starring: Ajay Devgn, Tabu, Shantanu Maheshwari, Jimmy Shergill, Saiee Manjrekar
Director: Neeraj Pandey
Rating: 2.5/5
Moonfall
Director: Rolan Emmerich
Stars: Patrick Wilson, Halle Berry
Rating: 3/5
'The worst thing you can eat'
Trans fat is typically found in fried and baked goods, but you may be consuming more than you think.
Powdered coffee creamer, microwave popcorn and virtually anything processed with a crust is likely to contain it, as this guide from Mayo Clinic outlines:
Baked goods - Most cakes, cookies, pie crusts and crackers contain shortening, which is usually made from partially hydrogenated vegetable oil. Ready-made frosting is another source of trans fat.
Snacks - Potato, corn and tortilla chips often contain trans fat. And while popcorn can be a healthy snack, many types of packaged or microwave popcorn use trans fat to help cook or flavour the popcorn.
Fried food - Foods that require deep frying — french fries, doughnuts and fried chicken — can contain trans fat from the oil used in the cooking process.
Refrigerator dough - Products such as canned biscuits and cinnamon rolls often contain trans fat, as do frozen pizza crusts.
Creamer and margarine - Nondairy coffee creamer and stick margarines also may contain partially hydrogenated vegetable oils.
North Pole stats
Distance covered: 160km
Temperature: -40°C
Weight of equipment: 45kg
Altitude (metres above sea level): 0
Terrain: Ice rock
South Pole stats
Distance covered: 130km
Temperature: -50°C
Weight of equipment: 50kg
Altitude (metres above sea level): 3,300
Terrain: Flat ice
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UAE currency: the story behind the money in your pockets
The biog
Mission to Seafarers is one of the largest port-based welfare operators in the world.
It provided services to around 200 ports across 50 countries.
They also provide port chaplains to help them deliver professional welfare services.
Crazy Rich Asians
Director: Jon M Chu
Starring: Constance Wu, Henry Golding, Michelle Yeon, Gemma Chan
Four stars
'Avengers: Infinity War'
Dir: The Russo Brothers
Starring: Chris Evans, Chris Pratt, Tom Holland, Robert Downey Junior, Scarlett Johansson, Elizabeth Olsen
Four stars
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Company%20profile
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20FinFlx%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%20January%202021%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Amr%20Yussif%20(co-founder%20and%20CEO)%2C%20Mattieu%20Capelle%20(co-founder%20and%20CTO)%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EBased%20in%3A%3C%2Fstrong%3E%20Dubai%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20FinTech%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFunding%20size%3A%3C%2Fstrong%3E%20%241.5m%20pre-seed%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Venture%20capital%20-%20Y%20Combinator%2C%20500%20Global%2C%20Dubai%20Future%20District%20Fund%2C%20Fox%20Ventures%2C%20Vector%20Fintech.%20Also%20a%20number%20of%20angel%20investors%3C%2Fp%3E%0A
ICC Awards for 2021
MEN
Cricketer of the Year – Shaheen Afridi (Pakistan)
T20 Cricketer of the Year – Mohammad Rizwan (Pakistan)
ODI Cricketer of the Year – Babar Azam (Pakistan)
Test Cricketer of the Year – Joe Root (England)
WOMEN
Cricketer of the Year – Smriti Mandhana (India)
ODI Cricketer of the Year – Lizelle Lee (South Africa)
T20 Cricketer of the Year – Tammy Beaumont (England)
The%20specs
%3Cp%3E%3Cstrong%3EEngine%3A%3C%2Fstrong%3E%204.0-litre%20twin-turbo%20V8%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E680hp%20at%206%2C000rpm%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E800Nm%20at%202%2C750-6%2C000rpm%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3ERear-mounted%20eight-speed%20auto%3Cbr%3E%3Cstrong%3EFuel%20consumption%3A%20%3C%2Fstrong%3E13.6L%2F100km%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20Orderbook%20open%3B%20deliveries%20start%20end%20of%20year%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh970%2C000%3C%2Fp%3E%0A
