For a start I want to apologise to Robert Palmer for stealing the key line from his 1980 pop hit. Or maybe I want to apologise to Arthur Conan Doyle for stealing the idea that it was the clues that changed everything – at the time the radical idea behind his character Sherlock Holmes who appeared in 1887 in Study In Scarlet, but whatever the case – I’m sorry.
I’m sorry because for the past year I have been writing about the long slow grind, about the death of volatility and about the unlikelihood of exogenous shocks to the sharemarket. I have been writing about the fact that I think shares are overvalued and by and large have been keeping my powder dry – continuing to invest in my business rather than in the market and preserving cash, because the chance of volatility had kind of evaporated.
Well I was wrong.
I had written long and quasi-academic articles about how, maybe the past 50 years were an aberration and that maybe we were in a much slower growth – post Keynesian, post monetarist grind and that the new normal of – well pretty much nothing happening – was in fact the old normal and that we had better get used to it.
I was – as I have just previously pointed out – wrong.
Here’s the thing – volatility is back and it’s causing real chaos. Not for me, and not really for most Australians but for the people who had been taking big bets on long periods of great calm remaining the future of the share market.