The 'Ow Jones Index

News media have been very excited by the amazingly large movements in stock market indices over the past two weeks. October is known to be a rough month for equities. Now, foreign exchange rates have fallen into the mire. Last week, we saw the British Pound start the week at a rate of a pound was around US$ 1.75. By the end of the week, the sucker had fallen to 1.59! That's a fall of some 9 percent. It is what you could expect over several months. But in a week? Other currencies, especially against the Japanese Yen, have had to weather an amazing rise in the strength of this now "ninja" currency--it's been kicking the buck hard. Against the US$, it moved from 102 to just below 91, nearly an 11 percent movement. Against the Euro, the Yen moved from nearly 139 to about 114, that's an 18 percent movement; more scary is that over the month of October it had moved 25 percent. Yes, these are all unprecedented moves in currency markets. The movers and shakers are moving and shaking all over.

In terms of what has been going on in world wide financial market, especially in New York, the recent days have been all about the equity markets--data have taken a back seat. So, the focus on stock markets has been:
1. What is the likely outlook, indicated by futures prices?
2. How does the market open, in line with these indications or not?
3. Can the market sustain any gains or limit any further declines during the day?
4. Can gains be maintained till the close of trading, at 4pm?
5. If there is a fall, how much further will it go?

Yesterday was so amazing, for instance, with the market up and down, and up, then in the last 15 minutes, down a huge 200 plus points. Today, the market started up, and stayed that way most of the time, the Dow Jones Industrial Average (or as I now call it, the "'Ow Jones") ending with an amazing flurry 889 point increase--with another charge in the last hour. All that on a day when data showed US consumer confidence was the lowest for over 40 years. So, the "'Ow Jones" posted its second-best ever point gain as the cheapest valuations in 23 years lured investors and increased commercial paper sales signaled credit markets are thawing.

But, this is near the month's end and all sorts of book balancing is needed. hat was the 2nd biggest up day in the equity market's history. And want to hear something funny? After the 100 point S&P rally today, another 100 point rally from today's close would still leave us stuck in a 840-1040 range! The markets are still making a sideways move.

Nerves have definitely been jangled. I have had to take a few lumps. These are crazy times and irrational actions are plenty to see.

The best plan in recent days has been to leave and go to do something else. Yesterday, I did battle with Cable and Wireless to get a replacement SIM card for my phone: one hour of arguing about what was good ID, but in the end I prevailed. Today, I helped my friend, "Thesephone", sort out a problem with a non-cooperating computer, and then joined the kids at the beach.

Someone calculated that this month, US$12 trillion of market value had been erased before today. That's so big a number that I do not really know how many zeros it has.

It's an insane time but no need to forget that markets can stay irrational much longer than investors can stay solvent.