By Al Emid  

Toronto – Canada

 

 

 

 

 

Al Emid has worked in communicating ideas and concepts since beginning his career at an educational television network in 1967.  He is the co-author and author of several financial books, most recently The Emid Report on Volatility 2019 available on all major book sites.

 

 

 

 

 

Chapter 13:

Let’s Be Careful About History

 

 

 

Stock market history is not repeating itself and we have to avoid repeating our reactions.

 

The financial crisis of 2008-2009 that shook our entire financial system also shook many of our values, perspectives and many investors’ finances.

 

For some, it shook their faith in their own destinies as otherwise seemingly secure employees received the proverbial pink slips and established entrepreneurs found their companies faltering or failing completely.

 

For many, it increased their aversion to risk.  Now, the question is whether and to what extent the current stock market volatility will cause the same reactions.

 

First, let’s consider the differences.  The 2008-2009 crisis resulted from the convergence of a host of unfortunate factors including the well-renowned housing bubble, some exceptionally questionable mortgage practices, ill-advised financial products and other factors.  The panic of the times worsened an already disastrous situation.  If we subtract the panic effect, 2008-2009 would still have been terrible but the panic (and panic-selling) added fuel to the proverbial fire.

 

One of the many forms of fallout was a loss of faith by some individuals in established financial institutions and a feeling that they had failed their customers and investors.

 

Now, the causes of the current volatility form a very different list than exploded in 2008-2009: the constant debate about interest rates, the continuing uncertainty of the American trade dispute with China, the seemingly never-ending BREXIT imbroglio, the tensions in the Middle East and the list goes on.

 

So, where does that leave today’s investor?

 

Those that have a continuing faith in their own decision-making and the counsel of their professional advisors, as well as a belief that the capitalist system will continue and inflation will remain ever-present, can continue participating in the stock market, with or without revising their risk tolerance.

 

History is surely not repeating itself.

 

 

 





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