JSE woes spark fear of bear market
Investors may have begun the year full of optimism but are having nightmares now, with the Alsi set for its worst performance in a decade
The JSE suffered a fresh sell-off this week, raising concern that the current decline could develop into a bear market with panic and fear feeding a vicious cycle. The all share index lost as much as 4% over the week before recovering half the losses by Friday. It is about 14% below its record peak reached in late January. Old Mutual Multi-Managers analysts Dave Mohr and Izak Odendaal note that the traditional definition of a bear market is a 20% decline but call this somewhat arbitrary. "The biggest risk of a bear market is often not the loss of value of shares, but whether investors respond to the price declines by crystallising losses and selling out. This is where the real value destruction usually happens," they wrote in a recent commentary. "The definition of a bear market should probably include a psychological element, when ordinary investors and professionals alike are gripped with angst and panicked selling is rife." Investors may have begun the year full of optimism but a...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.