T.S. Eliot, Stock Market Guru

“This is how the world ends / Not with a bang, but with a whimper.”

T.S. Eliot. Photo: Lady Ottoline Morrel. Source: Wikipedia

These are the closing lines from T.S. Eliot’s famous poem “The Hollow Men.” The poem is about exhaustion, disillusionment, and ennui in a war-weary post-WW I Europe. It describes the sense of being caught between wanting to do something and doing it; between—in the poet’s words—conception and creation. And its final lines are some of the most quoted in the English language.

We often find that things end “not with a bang, but with a whimper.” That is, they don’t have a big cinematic climax, but a gradual decline. It’s often that way with markets. The Lehman bankruptcy in 2008 was followed by a market collapse in October, as it was clear that the ensuing credit-crunch would lead to a major recession. But the market didn’t hit bottom until early March of 2009—as fears over bank nationalization and other recessionary issues peaked.

S&P 500 During the Financial Crisis. Source: Bloomberg

We saw the same pattern during the Euro-crisis in 2011. There was a speculative blow-out in early August of that year, as worries over a potential Greek exit from the currency peaked. But the market didn’t bottom out until October, after ECB President Mario Draghi said he would do “whatever it takes” to save the Euro.

It seems that in the current downturn, we’ve seen the “bang” of the Chinese Yuan devaluation and the bursting of their market bubble. But we haven’t seen a “whimper” yet. That is, we haven’t had a period of higher volatility and grinding decline. But just because we haven’t seen it yet doesn’t mean we won’t. The market’s ride is likely to get a little bumpy.

Good literature endures because the author describes something true in our own minds. And sometimes we find its lessons to be true in the markets as well.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2017-07-17T12:22:39+00:00 September 1st, 2015|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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