The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails

Money Never Sleeps

The world has evolved—some critics might say devolved—into a giant flowchart for capital. Rivers of money meander from one investment to the next, from one country to another. Since 1990, global capital flows have increased faster than the world’s gross domestic product (GDP).

If you could look upon earth from outer space, and somehow illuminate all the capital flows, you would see huge oceans and rivers of money in the United States, Europe, and Asia. Smaller seas, chopped with waves, would be evident in emerging markets, such as Vietnam. At different times of day, the money pools would glow red as markets opened and closed. The amount of money in these oceans and rivers—what is called liquidity—is ever shifting. The growth of cross-border capital flows demonstrates that the world is intoxicated with investing. All of this money—harnessed by stocks and bonds—coils around the globe.

Everything is touched by derivatives contracts that sit in all the spaces between bond and stock markets, essentially unifying all the world’s markets so that if one part stumbles, the problem infects other markets like a super virus. This makes volatility a constant market hobgoblin, and one that is increasingly violent, as the world’s largest, most sophisticated investors are increasingly chasing fewer and fewer opportunities to make high returns on money.