Simon English: Investors are back in the mood to take risks again
Thursday 09 February 2012
Outlook "Global stocks have hit a fresh six-month high", read the story, "as hopes for a worldwide economic recovery outweigh the sentiment-sapping impact of the lingering eurozone fiscal crisis".
It's true. Stock markets are up. There's a slight feeling about the Square Mile, a tentative one, that maybe everything is going to work out. Investors are starting to shift positions – they are risk on, rather than risk off, if you can tand the jargon.
For what seems like years, trading volumes for shares have been moribund. No one much wants to play. Hands are for sitting on.
It's changing a bit. Certainly, the mood at The Counting House on Cornhill in the City the other night was upbeat.
One broker, the type of sagging old timer who's lived through more downturns than you've had bacon sandwiches, reckons we are at that point in the cycle where people are so bored of being pessimistic that they start taking chances again. It isn't that there's any particular reason for optimism, it's just that humans can only be glum for so long.
He also reckons that financiers are at that point where they realise they need to justify their existence. If they survived recent job culls by being a Steady Eddie who could be trusted not to make a hash of things, they reckon that to get through the next round of cuts they need to be productive. In short, they need to take a risk. This is how things start moving again.
The future is bright, says the broker. Wear shades.
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