Lemming alert

[Wolf DeVoon]

Important post at FT Alphaville today. Social metaphysics as metaphor.

Make Like A Lemming and Speculatively Converge

(read story, copy the chart for reference, then consider my remarks which follow)

The big banks, called 'bulge bracket' banks, are few in number: UBS, Merrill, Goldman Sachs and about a dozen others. When they and big fund managers buy assets, the amount of money involved itself is a pricing factor, known as "weight of money." When they all buy the same stuff in unison, the price bounces mightily. To avoid sudden repricing of any single asset class, investors and money managers have been buying everything. The only asset that's losing value is the US dollar, which is paradoxically lifting US equities (Dow, Nasdaq listed shares). It takes more dollars to buy a piece of GE, because dollars are down. GE sales and earnings are flat.

See also http://ftalphaville.ft.com/blog/2007/10/12...-bank-firesale/

W.

Edited October 12, 2007 by Wolf DeVoon