Events like The World Wars, Great Depression, Lehmann Crisis, get etched in our minds by the sheer uniqueness or the magnitude of their occurrence.
Also, by virtue of the huge advances made in technology over the years, information (rumours, lies and truths) get disseminated ever so quickly.
Fortunately or unfortunately, in this ever increasingly connected world, making decisions for our investments becomes much more harder.
Today, among many other events, the global markets crashed. Over the last few months, every government, central banks, financial markets, commodity markets are clueless about the real problem, a probable solution, effectiveness of the solution and time period within which the solution will take effect.
Some countries are fighting high inflation, others are focusing on improving growth of their economies, some others fixing their debt crisis and a few are recovering from natural calamities . Since, all countries are not facing similar issues (pretty much expected at any given time), ‘One Size Fits All’ solution does not work.
Surprisingly, despite the varied issues countries are facing today, at the time of writing, stock markets across the world have fallen anywhere between 2% and 6%. Currencies have fallen between 2% to 7% against the dollar. Crude oil has fallen 3% to 5%, gold has fallen by 4%, silver by 10% ALL IN A SINGLE DAY.
Few of the key reasons for the current chaos (and at all other times :-)) and the root for the ‘negative perception of risk’
• Fear
• ‘Following the Herd’
• Greed
• Knowledge is power, ignorance is bliss – little of both is a recipe for disaster
If we can control the above reasons and ‘react’ better with our behaviour, global events will become less unique and smaller in magnitude.
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