2015-11-22ft.com

The European Central Bank president is largely responsible for one of the most overcrowded trades in markets -- and there is a risk it could all go horribly wrong. In the past month, every investor I have spoken to has told me they are overweight European equities, citing the quantitative easing policy of Mr Draghi and the ECB as one of the main reasons. But is Mr Draghi creating a potential nightmare scenario for investors?

...

Investors reason that it is unwise to fight a central bank. It makes sense to be fully invested in risk assets such as equities when a central bank is actively easing, as looser monetary policy encourages corporations to borrow at cheap rates.

...

However... Upside is limited because the good news is largely priced in. More significantly, if the market reverses, it can be difficult to exit as everyone wants to sell at the same time.



Comments: Be the first to add a comment

add a comment | go to forum thread