The FTSE has a feelgood factor — but you can't rely on ‘vibes'
I s the UK equity market finally turning the corner? I've been asked this question many times in recent weeks. With the FTSE 100 up 7 per cent this year, versus the S&P's 2 per cent, the answer hinges on whether this reflects international allocators 'not buying the US' and parking capital elsewhere until events calm down over the Pond, or if they are truly 'buying the UK'.
When we talk about what drives investor behaviour, there's a tendency to focus on the hard stuff: figures, data, arcane algorithms. But even as an economist and self-confessed numbers person, I'll freely admit that's only part of the picture. 'Vibes' are also important
A 'good vibe' can, in the jargon of investing, equate to 'momentum', and a lot of strategies are built on it. It describes when a stock or asset class continues moving in the same direction due to investors piling into a trend, and as they do, this enthusiasm keeps propelling the value higher. Essentially, it's what happens when the rising price of an asset is strong or sustained enough to create Fomo (fear of missing out).
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