On the other hand, no political measures of any consequence were taken to soothe the markets' existentialist angst. It seems quite clear that the system is stable enough to wallow in its rut but not strong enough to pull itself out. Ben Bernanke is more worrying than reassuring. The forex market is wavering between a euro comeback and the dollar as a safe haven, backed by what is still the world's largest economy. China's national statistics inspire only measured confidence. Everywhere, contradictory readings abound: on the one hand, there is a huge glut of liquidity and interest rates are very low but, on the other, unemployment remains high. For some recession continues to take a cruel toll, while for others it has barely been felt. All this has led to markets that bump and scrape where there are no real obstacles.
Why is it that no one wants Roche or Novartis shares that pay a dividend of over 4% (with no danger of seeing it cancelled), whereas the long-dated bonds of the same companies with a measly 1½% yield are selling like hotcakes? Meantime luxury goods shares are soaring to new records but Cisco, which possesses the world's best web-accessing technology, has been hammered owing to a convoluted interpretation of the company's guidance. More generally, the problems inherent in digesting the revolution of high tech and IT and the resulting lack of perspective can be seen in the media's inability to rank news concerning natural events. We learn about developments like the forest fires in Russia, the flooding in Pakistan and the oil spill in the Gulf of Mexico when they have already reached disastrous proportions. The aim is more to create a sensation than it is to stimulate thinking on how to prevent such things from recurring in the future. By forever gazing down at our trudging feet, we lose our view of the road ahead.
Our civilisation built on the here and now desperately needs to take a step back. We should be analysing data in absolute terms instead of always comparing them. We should be going back to the real values of investing instead of relying on solutions so soluble that one wonders if they have any substance. Buying the shares of the world's top 20 or 30 companies cannot be a mistake. No one was "made" for this hyperactive present. We should be rediscovering the virtues of patience.
Frédéric Binggeli
Banque Privée Edmond de Rothschild S.A.
23 August 2010