I am sure that I cannot add anything more to what you have already seen on the media. We have been and are being subjected to the worst volatility and extreme and negative events I have ever experienced. They are afflicting the speculative and what were considered to be ‘safer’ investments alike in many instances and even gold has been falling of late, dropping over 11% from its high, apparently down to those accessing liquidity or indeed meeting ‘margin calls’ against other investment positions or debts they held against other assets. Forced sellers of some assets also create a big downward spiral in the investment price regardless of the underlying fundamentals of the company or even the investment fund.
You know something is fundamentally wrong when such daily spikes are so extreme (with five of the biggest points’ movements for the Dow Jones in a matter of days) and you see such giants as Royal Dutch Shell shares down by over 50% since the beginning of the year alone and where its dividend payments become equivalent to over 14%pa and still maintainable based on the Business’ cash flow, etc despite the ravaged oil price (down over 60% at the time of writing) as a consequence of Saudi Arabia and Russia’s unhelpful shenanigans. It’s certainly not alone and plenty of sound companies have seen their share prices battered and at levels never anticipated in any semblance of prior rational assessment and when they may have been purchased.
It’s almost
pointless selecting some of the worst-savaged as there are so many and the main
indices themselves have now suffered amongst the biggest percentage declines of
any bear market in history and with a severity and speed never experienced,
exacerbated by an ever-jittery audience, a lack of connectivity by investors
with the underlying businesses to which they have subscribed, fewer large
long-term investors these days as used to exist (insurance funds and better
balanced pension funds for example), more ‘passive’ holders (index-trackers)
and the ability of trading instantly, with a more inexperienced investor and
institutional base converting irrational fears into a trade and losses
sustained for them, as opposed to sitting-it-out. You must not panic, you must
not sell-up and if you have spare funds beyond your emergency pot, then think
about nibbling-away, with eyes closed and put all the correspondence about your
holdings in a drawer to revisit later in the year. Do not keep ‘logging-on’ to
see the values of your investments, if you have such access. It does not help.
Remember too that with savage sell-offs, some of the biggest ever daily increases have happened not long after. That is no guarantee this will happen again and prices may fall further but the same forces which exaggerate declines work in reverse and those who have exited miss that imperative recovery.
