Don’t panic when markets crash — just grin and bare the bear
Investors across the world have recently suffered sharp losses — what questions should you be asking right now?
A September that shocked global investors was followed by an even worse October, with the MSCI All Country World Index recording a loss of 9.3% (in dollars) to October 26, its worst performance since the peak of the eurozone crisis in 2012. The index is down 5.8% on a year-to-date basis, while the FTSE/JSE SWIX Index is down 12.6% in September and October (in rand), and 15.8% on a year-to-date basis. Before making any decisions, it is important to understand the key factors behind the sell-off. Global growth concerns: 2018 started with a lot of optimism about “synchronised global growth”. This optimism has now evaporated. The IMF has cut its global growth forecasts for 2018 and 2019 by 0.2% to 3.7%. However, markets are signalling that the expectations of the slowdown are more severe.
The Citigroup Global Economic Surprise Index, which measures how often data comes in better or worse than expected, has been in negative territory since April, its longest negative stretch in fou...
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