If anything, the selling pressure has accelerated after last week's double-digit falls, as the passage of the Paulson rescue plan seems increasingly an irrelevance. Short-selling bans seem to have made things worse, CDS settlement auctions overshadow credit markets, depositor rescue plans spread throughout Europe, the Russian stock market closes again, Icelandic banks fail, the UK government attempts to recapitalise its own banks and there is a general sense of panic in the markets. In short, it's another day to wear your tin hat if you're an equity investor.
But as Jim Rogers once said, an investor should "buy panic and sell hysteria." Are we getting closer to a tradable bottom in equities? With the VIX at multi-year highs, individual investor sentiment (usually a contrarian indicator) firmly in the bearish camp, and bear market images splashed all over the popular press and the news bulletins (also a contrarian sign), perhaps we're getting close. On the other hand, the forces of deleveraging are massive, and the scale of the credit bubble excesses threatens a multi-year hangover, with bankruptcies soaring and a deep recession. Meanwhile, the cash-rich countries of the Middle East, Russia and China will soon be in a position to buy the whole Western banking industry from a pocket of loose change ...
But buying now will take some strong nerves—if you can even access the market at all. In one of the more spectacular foul-ups by the world's regulators, the Russian stock exchange closure has exacerbated price falls, with the benchmark index down more than 60% in a matter of two months. As Lyxor, manager of the leading Russian equity ETF in Europe (Dow Jones Russian Titans 10 ETF), confirmed to me this morning, investors will have to wait for the market to reopen on Friday in order for two-way liquidity to return to the ETFs.
For some reason, a comment I heard 15 years ago from a grizzled ex-colleague in fund management keeps coming to mind: "emerging markets are markets you can't emerge from in an emergency"...
Returning to the job at hand, and as we launch the IndexUniverse site for Europe, here are some thoughts—not in any particular order—about our objectives and how we can best serve the European ETF investor.
We aim to become the leading independent source of news and comment for the European ETF market, in the same way as our sister site, IndexUniverse.com, has done in North America.
We will always try to see things from an investor's point of view, pointing out the pluses and minuses to the variety of structures now available in the index-tracking sector. Recent events have shown clearly that not every exchange-traded security is the same from a risk standpoint. There is still a dearth of truly independent information in the financial markets, and we are committed to providing it.
We would like—in line with the best blogging traditions—to make things as interactive as possible, and attract readers' comments to the site.
In addition, we have ambitious plans to launch Europe-based versions of our well-established print publications—Exchange-Traded Funds Report (ETFR) and the Journal of Indexes—and to make the data section of the site the first point of call for anyone seeking factual information on the European ETF market.
Finally, a word about me—I worked for 20 years in fund management and trading before deciding last year that I wanted to make a move into the ETF market. Despite my background in active fund management, I was attracted by the transparency, low cost and ease of use of ETFs, which are in my view one of the best things that have happened to investors for years. Jim Wiandt and Matt Hougan have been publishing my weekly features on European ETFs since February this year, and now I have the opportunity to build upon this role and edit the European site. It's an exciting challenge, and one I'm really looking forward to.