Quack theories that use mystical forces to explain away the downturn are designed to prey on gullible minds and are no substitute for straight and hard economic thinking
Puzzled by the way your portfolio is moving? Bogged down by confusing ratios between company performance and share prices? Perhaps you should start watching your kettle rather than your terminal.
According to Eugene Stanley, a physicist at Boston University in the US, the demand for stock goes up and down according to the same natural laws that govern the change water undergoes when it's heated into steam.
By analysing price data, Stanley says in the latest issue of the science journal Nature, 'econophysicists'' can fix a 'boiling point'' for a stock and identify periods when it is likely to climb or crash.
This could be a new insight into the way the markets work, or evidence that in troubled times weird theories explaining the stock market proliferate. Whichever, along London's hedge fund alley, or in one of the smarter suburbs of Zurich, serious young men are probably right now polishing plans for a 'Kettle Fund' based on Stanley's findings.
Imagine the prospectus. The fund will buy a kettle, no doubt a very expensive kettle, since it's a hedge fund and money is no object.
The kettle will be placed in the centre of the fund manager's trading floor, carefully filled with water. Purchases and sales of stock will be determined by the speed and strength of the kettle's toot as it comes to boil at specified moments throughout each day.
The Kettle Fund will aim for top quartile performance, the prospectus will claim, and clients will always be guaranteed a decent cup of tea when they drop by to see how their portfolios are doing.
Stanley and his fellow econophysicists also remind us that the advocates of weird investing theories always struggle to cloak their theories in plausibility.
The Hirsch Organization, publishers of the Stock Trader's Almanac, says the first five days of trading in a new year determine the direction of the stock market for the whole year.
In odd numbered years such as 2003, the Hirsch Organisation says, the chances of this indicator proving correct are even more pronounced.
Meanwhile, the sustained rally in the price of gold has brought that strangest of financial creatures out of the woodwork, the gold bug. Gold bugs have all sorts of theories.
Historians have noted that at times of great stress, during wars or revolutions, people turn from the rational to the mystical. Rasputin's influence during the years leading up to the fall of the Russian Czars is one example.
Something similar may be going on in the stock market. The news has been so bad for so long, people are giving up on sensible explanations for what drives the market, and listening to crazy ones instead.
There is no shortage of oddball explanations for what drives stock prices.
In the City of London, there has long been a 'hemline' theory, which states that when short skirts are in fashion, the stock market rises, but when long skirts come back, the markets plunge. At least, I think that's it. It may be the other way around.
Enterprising astrologers have found ways to adapt their charts of the heavens to predict how markets will move.
Probably the weirdest investing theory of all is the sunspot theory. This states that stock market movements are determined by cycles of sunspot activity.
How so? Well, according to believers, certain kinds of beams from the sun frazzle investors' brains, making them panic, and so sell shares. Alternatively, the absence of beams sent out during bouts of high sunspot activity keep investors' brains clear and bullish.
My own theory? I reckon the stock market is correlated to the state of Ross and Rachel's relationship in the TV series 'Friends'.
Think about it. When they were first going out in the mid-'90s, the stock market was rising. As they broke up around 1998, the Asian financial markets collapsed, threatening a global crisis.
The bull market peaked just around the time they accidentally got married, and then collapsed as they spilt up again.
Now, watching the first episode of the new series, I see Ross wants to propose to Rachel, but Joey proposed by mistake instead. So, the markets now are poised on a knife-edge.
Except, of course, like most mystical explanations of life, it's nonsense, designed to prey upon weak and gullible minds.
We can be sure of very few things, but we can be certain stock market prices have nothing to do with kettles, odd numbered years, hemlines, sunspots or TV characters.
The only way to understand the market is to think straight and hard.
Bloomberg London newsroom
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