{"id":7328,"date":"2024-08-08T09:46:19","date_gmt":"2024-08-08T08:46:19","guid":{"rendered":"https:\/\/cms.consilium-ifa.co.uk\/?p=7328"},"modified":"2024-08-14T06:28:56","modified_gmt":"2024-08-14T05:28:56","slug":"stock-market-correction-tumbling","status":"publish","type":"post","link":"https:\/\/cms.consilium-ifa.co.uk\/stock-market-correction-tumbling\/","title":{"rendered":"Stock Market Correction: Tumbling Through the Air, Landing on Its Feet"},"content":{"rendered":"\n
While everyone is captivated by the Olympic Games in Paris, admiring the incredible feats of the world’s greatest athletes, stock market investors are experiencing a different kind of performance anxiety. The global market itself is acting like an Olympian gymnast tumbling around.<\/p>\n\n\n\n
The week kicked off with alarming news from Asian markets. The Japanese stock market (Nikkei) has plummeted by 12.4%, the sharpest sell-off since \u201cBlack Monday\u201d in October 19871<\/a>. The South Korean market (Kospi) isn’t far behind, down 8.77%.<\/p>\n\n\n\n To add to the chaos, the VIX index, a measure of market volatility<\/a> often referred to as Wall Street\u2019s \u201cfear gauge\u201d, surged above 40 points from its average level of around 17%. This level of the VIX indicates a significant rise in expected market volatility and is the highest it has been since the early days of the Covid-19 pandemic. Further stoking fears, Warren Buffet’s Berkshire Hathaway sold off 50% of its stake in Apple. However, they remain Apple\u2019s largest owner.<\/p>\n\n\n\n Markets worldwide are feeling the impact of this shock, though not all to the same degree. Chinese, Indian, and Australian markets have seen more modest declines, with China\u2019s Hang Seng Index down 1.68%, India’s BSE SENSEX down 2.89%, and Australia\u2019s ASX 200 down 3.7%. European markets, including the UK’s FTSE 100, opened the week with losses between 2% and 3%, relatively stable compared to the drastic falls in Japan and South Korea.<\/p>\n\n\n\n This equity downturn and increased market volatility stem from fears that the US market might slip into recession, despite major analysts still considering this scenario unlikely. Goldman Sachs estimates a 25% probability of a US recession<\/a> over the next 12 months, while JP Morgan is more bearish with a 50% estimate. What we are experiencing might be nothing more than short-term market paranoia2<\/a>.<\/p>\n\n\n\n As a long-term investor<\/a>, it’s crucial to remember that stock market corrections are not system failures but vital aspects of market dynamics. It might be a difficult concept to accept as anxiety levels skyrocket, but these corrections provide disciplined investors the opportunity to benefit from future gains.<\/p>\n\n\n\n The chart below illustrates the UK bull and bear markets over the last 100 years.<\/p>\n\n\n\n <\/a>1 <\/a>(Financial Times, 2024)<\/p>\n\n\n\n 2 (Reuters, 2024)<\/p>\n\n\n