One of the main points of awareness of an investor is their ability to assess the reasonableness of the market, not only in the sense but mainly in the distortions that usually occur at the extremes of the cycles, whether underestimation or overvaluation. With the entry of Central Banks directly into the market sectors that before the financial crisis of 2007/08 were reserved for private investors, yet another focus of distortion, or manipulation, be it intentional or not. The extreme liquidity that exists today and that nobody denies, is a factor that prevents the regular functioning of the binomial demand and supply.
In fact, the recent Bank of America’s June Fund Manager Survey made the excess of “optimism” very clear, with a record number of 78% of respondents indicating that the stock market is indeed overvalued. But on a daily basis there are other touches, sometimes more subtle, but just as effective as keeping buying pressure afloat, as happened on Thursday with the news that the FED would reduce the requirements for certain investments made by the financial sector. It was enough to have changed the course of the market from a loss to a gain, the day before it was known that the FED will force the restriction of dividends and share buybacks, after the results of the stress test, the news of Thursday? or another recurrence of manipulation?
Photo by Marcus Lenk.
