Who’d be a diligent stock analyst, one that ferrets out the true fundamentals of a company, market or sector rather than simply looking to company officers for guidance? Those that are diligent reckon that on fundamentals, a price in the high fifties can’t possibly be justified for IBM Corp when about all that is doing well is personal computers that contribute nothing to the bottom line – but up in the high fifties is where the shares are trading, and derivatives trading is beginning to make the whole exercise pointless anyway: in London on Tuesday, the FT-SE Mid-250 Index of medium-sized companies jumped 135.5 points to 4,148.8 – not because the prospects for medium-sized companies suddenly looked much brighter – they emphatically didn’t – but, traders say, because UBS Securities had sold a large number of covered warrants on the Mid 250 index and needed to buy the underlying shares to cover its exposure; needless to say, market-makers saw a distressed buyer coming and moved prices against it.
