The dramatic stock market collapse of the past fortnight means that there are no easy ways to protect any wealth you might have, let alone make any more.
Savings need to be protected. Investments need to be reviewed with a focus on defensive assets. Retirement income expectations need to be completely reconsidered if you do not already have a fund that hasn’t been losing money.
Stock markets may be a very public manifestation of the general state of the global economy, but their erratic movement is also a reflection of the volume of trades, short term fear or optimism and greed.
A huge fall in stock market prices doesn’t mean that every company whose price drops is suddenly losing money or not worth owning. Nor is it a ‘contrarian’ signal to buy.
Daily stock market activity is about the most irrational thing you could use to gauge whether a share is worth buying or keeping.
In the case of financial companies, their prices have collapsed for a very simple reason – too many of them are bankrupt, but are being propped up with taxpayer’s money.
What falling stock markets are telling investors is that there’s never a good or bad time to buy really top quality companies or assets at the cheapest price you can achieve.