You have probably heard about this call out of Morgan Stanley to sell European equities. I read about on FT Alphaville.
This model has worked the other times it flashed sell which according to Alphaville was April 1981, Sept 1987, Feb 1990, May 1992 and April 2002. Well with the reasonable exception of May 1992 these were all periods that were bad for the US market too. In May 1992 the result was a decline of 7% in Europe over the ensuing months, still within the realm of down a little.
So four out five times this model also meant bad times for the US might be one way to look at it?
If something bad happens to US equities it only makes sense to think Europe will react in sympathy in some magnitude.
I don't view this as any reason for long term investors to make changes. If they are right and whatever your exit/reduction strategy is gets triggered you should stick to your discipline. For now I don't think this is actionable for investors; traders maybe, not sure about that one.
Wikinvest Wire
3 comments:
"Concerns about European stocks also weighed on the U.S. market, after Morgan Stanley issued "a full house sell signal" on the region, predicting a 14% correction over the next six months."
http://www.marketwatch.com/news/story/asian-stocks-decline-early-trading/story.aspx?guid=%7B768004A5%2D3DF9%2D4783%2DA794%2D22B8418C775F%7D
I wonder what they think about the US market over the same period? And Asia?
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