Fears of crash unfounded - for now
Saturday, 18 August 2007
Yikes! Stock markets around the world have swung wildly this week; is this a financial crash? says Gillian Tett of the FT. More here
Not yet - or not if you look at technical metrics. The usual definition of a "bear" market is when shares drop 20 per cent, as they did after the dotcom boom of 2000, say. However, most major markets closed the week broadly flat yesterday, after some wild swings. And the UK stock market is still "only" about 10 per cent down from its high a couple of weeks ago.
Well what can I say. Markets up. Markets down. Doom and gloom…and then a sense of relief. There is an American colleague who I respect coins the phrase “Financial Pornography”. He may have borrowed the phrase, but it refers to the financial press emphasis on the fear and greed principle. I am not anti Financial Pornography, the press is in business to sell papers… saying nothing is hardly going to get anyone to buy. The key is by all means look, learn, but taking action based on short term fluctuations does not have good foundations in building an investment portfolio.
I think Oscar Wilde said to expect the unexpected. If we know future investment returns are unexpected, learn to expect them. In such a way the events of the last week are not a surprise.
posted by Murray Round Wealth Management @ 16:15,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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