Intuitively it sounds like a very reasonable theory. With call options investors can speculate on rising prices, with puts they can place their bets on falling stock markets. If relatively more calls than puts are being bought, speculators apparently are optimistic.
In a little less than one hour the world will be watching the Mother of all Macro Economic Figures, the monthly US Non-Farm Payrolls. Could be even worse than 1956’s record of -629k (july). Maybe it beats december 1974’s figure of 602k. Expectations already dropped Wednesday after the disappointing ADP Employment figures. A figure of -550k would be called a non-event, below 600k would maybe trigger a new sell-off.
Correcting performance for currency effects is a good thing when comparing stock indices around the globe (see here for currency adjusted performance). However, regular investors in domestic stocks don’t care about the price of the US dollar, they’re interested in the performance. For Dutch, Irish, Italian and Belgian buy-and-hold investors there’s bad news. Their national indices have an even worse performance when we forget about the currency effect (again from Paul Kedrosky):
During a decade there’s a lot of dividend to be returned to the investors. For the AEX this accounts for about 15 points on a yearly basis. After ten years you would have really lost only around 25%. Really? Well, you shouldn’t mention the inflation..
Last October the financial world was shocked by a devastating short squeeze in German carmaker Volkswagen. A short while the producer of reliable but boring cars was the most expensive company in the world after skyrocketing from around 250 to above 1000 euro. In two days. Read more
Yesterday I mentioned the fact Amsterdam’s AEX index is having such a wonderful start of 2009, outperforming the rest of the world. Nothing bad about making a good run in three days, but it turns out the Dutch market index is a true underperformer over the past years. According to the an Australian newspaper the AEX ranked nummer 19 in the list of last years worst performers:
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