Contrary to popular myth — goldfish have a memory capability that spans months.
But that doesn’t stop Nomura’s chart of the day, titled “markets’ goldfish memory,” from making its point. Assets have very quickly reversed their post-March 11 moves.
On the right-hand side (and the black triangles) you’ve got annualised standard deviations for various assets after the Japan’s earthquake and tsunamis, which basically means the magnitude of their moves. On the left-hand side (the red bars) you’ve got the extent of the reversals of these original moves afterwards. And in the middle you’ve got some goldfish pics that we’ve added just for cyprinidae kicks.
So for instance, the Nikkei moved 0.9 standard deviations after the Tohoku quake, but has since reversed about 45 per cent of that move.
Here’s Nomura’s Lefteris Farmakis and Irena Sekulska with some comment:
Therefore, the market seems to have yet again rushed to conclusions, which have caused a significant stretch to certain valuations. Indeed it is quite interesting that almost two weeks after the accident most assets are back to status quo. Only Japanese markets have sustained the largest part of their moves, revealing the localised impact of the event.
So it looks like just a few assets — those Japanese bonds and stocks — have yet to return to their pre-quake status quo some two weeks after the disaster.
Round one to the goldfish.
Related links:
Markets shrug off multiple black swans – Reuters
Salmon market shrugs off Japan radiation fears - FT Alphaville