Stock markets and exchange rates continue to see-saw.
Record rises and falls on successive days look dramatic,
but too much should not be read into them.
The markets are nervous, and because they are nervous they
are irrational. There is no real reason for most of the rises or the falls.
There has long been a general need for revaluations, most of
them downward, after the over-optimistic pricing of the last decade.
Eventually, however, stocks, currencies, property, and
interest rates will all settle at more realistic levels.
It may be that part of the instability is due to the
leadership vacuum which is caused by the American Constitution leaving a gap of
almost three months between a Presidential election and the winner taking
Yet it may also be that this gap may have its uses. It is a
time for the markets to get some things out of their system. It is also a
useful cooling off period after the election that gives everyone, including the
winner, time to adjust to the new reality.
It may be some time before prosperity returns but some
stability should return to the markets fairly early in the New Year.
Until then, we just have to ride the see-saw.