Deal Volume as Contrary Indicator

The conventional wisdom is that as deal volume picks up, a bull market should continue.  Buyouts always engender bullishness and frequently show up in checklists of things to feel good about.

James Stewart turns this Myth of M&A on its head in Smart Money and posits a theory that deal volume is actually more indicative of market tops than bottoms…

A look at the numbers suggest that deal volume is, if anything, a reverse indicator of market direction. Consider that the all-time record for merger deals in a single year – $4.3 trillion, according to data-tracking firm Dealogic — came in 2007. That’s the same year the Dow Jones Industrial Average hit its all-time high. The feverish pace continued in 2008, until deal volume fell off a cliff after the collapse of Lehman Brothers and stock prices plunged. November 2008 marked the lowest level of M&A activity since 1995, when Dealogic started tracking deal volume.

Stocks bottomed in March 2009. So what happened to M&A activity in 2009, when stocks were undeniably cheap? Deals were few and far between, reaching a total for the year of only $1.3 trillion. The pace of deal making actually increased as stocks got more expensive.

Similarly, in 2000, when the Nasdaq hit its all-time high, global M&A volume reached $3.1 trillion, just behind the then-record of $3.13 trillion set the year before. In 2002, when stocks hit a post-bubble low, deal volume was only $1.27 trillion. (All M&A data are from Dealogic.)

Why are deals done after assets have gotten expensive in the public markets as opposed to when they’re cheap?  Stewart speaks with several M&A pros to find out why, click on over…

Source:

The Myth of M&A (Smart Money)

What's been said:

Discussions found on the web
  1. Immediate Edge Review commented on Sep 22

    … [Trackback]

    […] Read More Info here on that Topic: thereformedbroker.com/2010/08/24/deal-volume-as-contrary-indicator/ […]

  2. Dumps Shop 2020 commented on Sep 27

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2010/08/24/deal-volume-as-contrary-indicator/ […]

  3. 메이저놀이터 commented on Oct 18

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2010/08/24/deal-volume-as-contrary-indicator/ […]

  4. track1,2 + pin commented on Nov 22

    … [Trackback]

    […] Find More Info here on that Topic: thereformedbroker.com/2010/08/24/deal-volume-as-contrary-indicator/ […]

  5. tangerine login website commented on Nov 26

    … [Trackback]

    […] Read More here on that Topic: thereformedbroker.com/2010/08/24/deal-volume-as-contrary-indicator/ […]

  6. togel online commented on Dec 01

    … [Trackback]

    […] Read More Information here to that Topic: thereformedbroker.com/2010/08/24/deal-volume-as-contrary-indicator/ […]

  7. ruger in stock commented on Dec 01

    … [Trackback]

    […] Find More here on that Topic: thereformedbroker.com/2010/08/24/deal-volume-as-contrary-indicator/ […]

  8. 바셀티비 commented on Dec 28

    … [Trackback]

    […] Find More on on that Topic: thereformedbroker.com/2010/08/24/deal-volume-as-contrary-indicator/ […]

  9. discount wigs commented on Dec 29

    … [Trackback]

    […] Find More on on that Topic: thereformedbroker.com/2010/08/24/deal-volume-as-contrary-indicator/ […]

  10. jasmine sex doll commented on Dec 31

    … [Trackback]

    […] Find More Info here to that Topic: thereformedbroker.com/2010/08/24/deal-volume-as-contrary-indicator/ […]

  11. Study in Uganda commented on Jan 06

    … [Trackback]

    […] There you can find 38820 more Information to that Topic: thereformedbroker.com/2010/08/24/deal-volume-as-contrary-indicator/ […]

  12. Digital Transformation Company commented on Feb 05

    … [Trackback]

    […] Read More to that Topic: thereformedbroker.com/2010/08/24/deal-volume-as-contrary-indicator/ […]