Are we heading for another financial crisis?
The article I found reviews the tough break that the securities trading market has been experiencing since the beginning of 2016. With the crash of the Chinese market and a weak manufacturing report, global equity markets are falling across the world as uncertainty about the Chinese market continues to grow. The top three largest stock markets in the world have experienced a decline since the beginning of the year with the NYSE seeing a drop of 4.7 percent, the Nasdaq down by 6 percent, and the Tokyo Stock Exchange down by 2.3 percent. According to some investors, behaviors of the current market are similar to 2008 setting the stage for another financial crisis. Also contributing to the steep market decline is the deteriorating relationship between Saudi Arabia and Iran, which is impacting crude oil. As a result of the market uproar, many investors are seeking out "safe" assets such as gold and T-bonds (Gensler, 2016).
As David mentioned in class last week, many investors will panic and sell, sell, sell. In most scenarios it is not in an investor's best interest to sell securities immediately. Instead, hold your position and buy additional securities with cash balances at the low end of the market. Furthermore, having a diversified portfolio and not having all funds concentrated in one type of investment tool (stocks, bonds, mutual funds, currency, commodities, etc.) will allow an investor to mitigate risks associated with a troubled market.
Gensler, L. (2016, January 7). Stocks Slammed: 2016 Sell-Off Accelerated On China Fears. Retrieved from Forbes: http://www.forbes.com/sites/laurengensler/2016/01/07/stocks-slammed-as-china-worries-intensify/
COMMENT
Are we heading for another financial crisis?
The article I found reviews the tough break that the securities trading market has been experiencing since the beginning of 2016. With the crash of the Chinese market and a weak manufacturing report, global equity markets are falling across the world as uncertainty about the Chinese market continues to grow. The top three largest stock markets in the world have experienced a decline since the beginning of the year with the NYSE seeing a drop of 4.7 percent, the Nasdaq down by 6 percent, and the Tokyo Stock Exchange down by 2.3 percent. According to some investors, behaviors of the current market are similar to 2008 setting the stage for another financial crisis. Also contributing to the steep market decline is the deteriorating relationship between Saudi Arabia and Iran, which is impacting crude oil. As a result of the market uproar, many investors are seeking out "safe" assets such as gold and T-bonds (Gensler, 2016).
As David mentioned in class last week, many investors will panic and sell, sell, sell. In most scenarios it is not in an investor's best interest to sell securities immediately. Instead, hold your position and buy additional securities with cash balances at the low end of the market. Furthermore, having a diversified portfolio and not having all funds concentrated in one type of investment tool (stocks, bonds, mutual funds, currency, commodities, etc.) will allow an investor to mitigate risks associated with a troubled market.
Gensler, L. (2016, January 7). Stocks Slammed: 2016 Sell-Off Accelerated On China Fears. Retrieved from Forbes: http://www.forbes.com/sites/laurengensler/2016/01/07/stocks-slammed-as-china-worries-intensify/
COMMENT
