Stock Market Recovery – Riding the Bounce
Posted 13. Apr, 2009 by Lorraine James in Market Commentary
Our markets and share prices have been battered around the world over the last 6 – 12 months, and it’s no surprise that the novice investor has given in to the media brainwashing that has followed and dumped their shares in panic, or stayed entirely out of the market while the world licks it’s proverbial wounds.
After all, we’ve since copped a barrage of grim news with falling real estate values and rising costs for food and petrol, amid fears about recession and the fragile state of the global banking system.
I’m finding the general public’s conclusion is that the current state of things is like nothing we’ve ever seen before and how can we ever get over this? I even had a close friend (who I thought would know better) suggest that the stock market had seen its day….and how could investing in shares ever hold the same appeal again!
So when I came across these two statements this week, I thought I’d share them with you…
“This time it is different. This time the market won’t be so quick to bounce back….who can look at the world right now and not conclude that things have changed dramatically?”
“The next recession won’t look like any other that has preceded it in recent decades… we are so heavily indebted that a slump would quickly turn into a Latin American style depression”
Sound familiar…any guesses when in the last 6 to 12 months these statements were made?
In actual fact, they weren’t!
The first quote was made in September 1998 when the Russian bond crisis hit, and the second was in September 1989 prior to George Bush Senior invading Iraq!
At the time, both these economic crises looked as if they would last forever and drag the world into a deep recession, and I’m sure if you were to ask anyone who remembers those events, they would recall the sense of doom and gloom that drove the fear in financial markets back then.
And while no two crises are ever exactly the same, what we need to remember is that whenever our markets have faced a crisis, they have always rebounded and come out stronger on the other side. So while you might choose to sit on the fence and wait for the storm to well and truly pass, you just might miss the opportunities of a lifetime!
No- one puts it better than the great Warren Buffett…
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
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