Blockhouse Archives

A football result shouldn't move a stock market. 1,000 games say it does. Why mood, not just fundamentals, moves prices. Alex Edmans, Professor of Finance @ London Business School, explains: "what you learn in any finance class is that the market is affected by fundamentals." "But what research actually finds is that sentiment and emotions make a difference." "if you study over 1,000 soccer games, after a country is knocked out of the World Cup, the market falls by about a half a percent the next day, which is 15 billion pounds when applied to the UK stock market." "You are human, and if you're human, then you are susceptible to your emotions, and something like this does affect how you trade or maybe how you assess a company."

Risk units are the hard part; return units are easy. Alan Waxman Co-Founder and CEO of Sixth Street explains: "So return units are easy." "Risk units are a lot harder." "first of all, what's the quality of the business?" "The second thing is where do you sit in the capital structure?" "exact same company, exact same sector in Australia, if it were in Ukraine, you're probably gonna demand higher than 15%."