The Internet has undoubtedly enhanced investors' knowledge, allowing them access to information that was previously the domain of wealth managers. However, there are a number of investment market anomalies that might surprise you. While you might smile at some of these facts and figures, a number have become what many would call "self-fulfilling prophecies."

 

The January barometer

 

For many years now, investors have looked at the performance of stock markets in January as an indicator for the rest of the year. Is this an accurate barometer? Well, for no apparent reason, when stock markets rise in January, they tend to perform better for the rest of the year, with a 75% success rate.

 

Tulip Mania

 

While many investors look back at the 1929 US stock market crash, which led to the Great Depression of the 1930s, as the first significant setback for investment markets, this is not the case. The first major speculative bubble recorded occurred in the 1630s in the Netherlands and revolved around the price of tulip bulbs. Speculation saw the price skyrocket only to collapse once the bubble burst.

 

Black Monday (1987)

 

We’ve all heard of Black Monday, 19 October 1987, when the Dow Jones Industrial Average fell by 22.6% in a single day. While this is the largest percentage drop in stock market history, even to this day, there is no major economic event to explain the collapse (Google it if you don't believe us). Many simply put it down to the end of a bull market that had run too far, but a 22.6% correction in one day?

 

Water futures trading

 

Did you know that some investors actively trade water futures on the Chicago Mercantile Exchange as a consequence of water shortages in states such as California? Given the potential impact of global warming going forward, might we see water futures trading become more widespread?

 

The "Sleeping Beauty" 100-year bond

 

The popularity of corporate bonds has increased dramatically in recent years, with investors able to secure a range of different maturity dates. However, in 1993, the Walt Disney Company issued what it called a "Sleeping Beauty" bond with a maturity date of 2093. Yes, that's right—100 years duration!

 

Flash Crash (2010)

 

If we look back to 6 May 2010, the US stock market suffered what was described as a “Flash Crash”, resulting in a near 1000-point fall in minutes (then a rebound back to former levels). High-frequency traders were blamed for aggressively buying and selling large volumes of stock, which led to huge volatility and wider investor concerns. Consequently, the rules for algorithmic trading were tightened, but will the regulators ever be in total control?

 

Investing in lobster fishing licences

 

In reality, there is no limit to the type of asset you can buy and sell; if there's a buyer and a seller, a trade can be made. However, how would you feel about trading lobster licences in Maine? An integral part of the local economy, there are strict regulations on the sustainability of the lobster population and, therefore, limited licences available. Consequently, this has led to the creation of a secondary market in lobster fishing licences!

 

Summary

 

As an investor, the Internet has opened the door to a raft of information regarding investment markets going back hundreds of years. While some of these facts about investment markets may seem irrelevant, they demonstrate the breadth of investment opportunities available and the experience of investors and markets going back literally hundreds of years. The big question is, have we really learnt from past experiences?

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