Oh (not) a beautiful morning

The world woke up a different place this morning, shaken up by global financial markets misbehaving en masse. Some of the headlines on Fin24.com throughout the day did nothing to give nervous investors a warm-and-fuzzy feeling:

  • WATCH: Is this the start of a global economic slowdown?
  • Equity bloodbath spreads through Asia
  • Rand sinks most since 2011 as commodities tumble
  • Gold only nugget amid JSE bloodbath
  • European stocks lose more than €400bn in value
  • Equities bloodbath ‘smacks of capitulation’

We are seeing an inherent behavioural characteristic of financial markets at play, called contagion. There are times when contagion is a good thing, and other times when it is a bad thing. Currently, it seems as though the bad kind of contagion might be here for a while. Depending on the view, the current financial landscape can be attributed to any number of the following:

  • Greece
  • China’s devaluation of the Yuan
  • General Negative Investor Sentiment
  • The tumbling Oil Price
  • Collapsing Commodity Prices
  • The uncertainty of the Fed’s next interest rate move
  • Eskom
  • Emerging Markets Sell-off
  • Risk Aversion
  • Unemployment

Our message to investors is this:

This is not the first, nor the last time that global markets will appear irrational. Asset Prices throughout the spectrum move up and down in cycles, and trying to time a particular market cycle will most certainly leave you looking foolish down the road. We continue to have a long-term positive view on investments by ensuring that your strategic asset allocation is in-line with your risk profile.

The full extent and magnitude of the current market hiccup might only be fully understood in 12 months’ time, whether it was material or not. One of our main roles is to stop you from making financially destructive decisions, and we rest assured that your portfolios are optimally positioned to perform to their own unique purpose throughout market cycles.

By |2016-01-21T21:23:33+00:00August 21st, 2015|