26th August 2015

Summer madness, Kipper und Wipper, stock market crashes?

Seemingly every summer, around August, when all the City pin stripped great and the good are sunning themselves, the ‘smaller’ boys are given free reign to express themselves with some unrestrained, energetic, dangerous play.

But in this case, the ‘smaller boys’ toy box is made up of trading terminals, data, more data, economic theories, fallacies, mis-information, misunderstandings, manipulation, smoke, mirrors and an element of ‘sod it’ someone else can clear up the mess.

In London on Monday almost £74bn was wiped off the value of the FTSE 100 index, initially led by mining stocks as it was thought that the fossil fuels and precious metals being guzzled by China may have seen a ‘waffer thin’ ‘Mr Creosote’ moment. On Tuesday it bounced back After an hour of trading, the FTSE 100 index was up 2.2 per cent, or 129.5 points at 6,028.4, regaining the psychologically key 6,000 level which it fell through on Monday for the first time since January 2013.

Strangely the market turmoil has seen no meaningful coverage in China.

Stock market crashes are not unusual, as history can show. The 21^st century has seen some great examples.

But one thing is for certain in all these crashes and that is that despite many seeing losses to their perceived wealth, there are many who will profit from the misfortune of others.

Betting that the economic turmoil in China would drag down western economies, hedge fund manager Crispin Odey is, this week, thought to have made £225million for himself and around 2,500 well-heeled investors in the 'China crisis'.

Warren Buffet once said that “I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years”.

Smaller boys should take note, after all the 'bigger boys' are back next week.

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