Monday, January 09, 2012
Stock market volatility has been going on for months now with no letup. Worries include the Euro, the viability of European banks, debt talks and more. One day the market is up because everyone thinks a resolution is on the way. The next day the market is down because no one believes the fix will work. And so it goes. From a PR perspective, it is a testament to the power of perception and credibility. Trillions are traded up and down based on the collective view of money men. Since they have no clue to the outcome of the Euro crisis, they hold their positions for shorter periods and are ready to run in an instant. If they did believe that the Euro crisis has been resolved, they would be holding their positions longer. The uncertainty of the future has spooked them, and they are trading on emotion. There isn't much that European governments can do for them. The route to a fix is slow and tedious with a great deal of uncertainty. Business doesn't like surprises and until the markets are more credible and perceived to be safer, the ying and yang of trading will continue.