>The Ice Age only ends when the market loses hope: there is still too much hope

■ One key lesson from Japan is that an essential ingredient to the end of a long valuation bear market is revulsion. It is when ‘buyers-on-dips’ become ‘sellers-on-rallies’. It is when volume dries up to almost nothing. It is the loss of hope. In Japan we saw huge rallies in the Nikkei on the back of short-lived cyclical recoveries. Each cyclical failure and further new lows in the equity market saw hope being progressively crushed. Previous US valuation bear markets typically take 4 or 5 recessions to fully play out. We have only had two.


■ The market is once again in a hope phase – hoping that the US is now in a self-sustaining recovery; hoping that China might be soft-landing; hoping that the Greece bailout and the ECB liquidity polices have settled things down in the eurozone. These bursts of hope are essential in long bear markets. Essential in the sense that hope must be crushed. It will be crushed. Hope still beats in the breasts of equity investors. The market will rip out that hope and consume it in front of investors’ eyes. Only then can the bull market begin.


■ Talking about pain, having previously shared my experience of an anaesthetic-free vasectomy, I feel I know what sudden unexpected pain is - link. Standing outside Daphne’s on my recent sun-seeking hols enjoying my happy-hour rum punch, this plucky crab proceeded to attempt to remove one of my toes. It hurt far more than I expected but provided much amusement for my wife. Upon finding he was not large enough to remove my toe he scuttled under the decking to get his bigger mates out to help him. Cue my exit.


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