Since I posted this morning, I have read 2 news items that ought to be brought to your attention! My primary source is the New York Times excellent Dealbook daily briefing.
$50 million each way on the Dow?
One is that in their attempts to explain the illogical level of current stock market valuations, some professional traders point to the increase in private traders using the stock market as an entertainment medium in the absence of sporting events to bet on. Add that to the increase in day traders partly driven by on-line stock punting services (some of which must get close to what is legal in term of pumping shares) and it is a credible suggestion of at least a contributing factor.
Something like that happened before the Wall Street Crash, as I recall……
The bigger they are, the harder they fall
The second point is a bit technical but important. It has been noted that the huge Japanese investment/holding company Softbank, which operates more like an investment trust, with its Vision fund as a major activity, has been noted to be buying up bond issues from companies of which it has significant equity stakes.
Now this can be seen in a number of ways but the most negative interpretation might be that it is bailing out cash flow issues to prevent its investment targets going under. With Softbank, which made a fortune by investing early in Alibaba, nothing is a small deal. I wonder if this is another hairline crack in the dam (its disputed deal with WeWork being a slightly worrying to?). Google the name if you want to know more – it makes interesting reading for investors!
This matters not only to Japanese stock market investors because Softbank is a major shareholder in numerous global businesses. If Softbank goes pop, global stock markets would feel the chill.
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