September 2011
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Day September 2, 2011

Quantifying the phobia of owning Apple shares

As the market continues to exhibit signs of instability, an interesting paper[1] identified a correlation between the U.S. stock market and an index of the U.S. Financial Conditions. This index measures the assessment of the probability of a crisis.

The conclusion is that an imminent crisis mentality pervades equities markets today and implies that pricing is largely disconnected from fundamentals. On this blog we’ve discussed the topic of fundamentals and marveled at how pricing seems to be largely exclusive of it.

The case is made by the following chart: