Tumbling, crumbling, melting ...real humbling

The global stock markets started to become jittery late last year(2007) as the subprime crisis in US surfaced. Within less than a year, the financial crisis arising from the subsequent credit crunch, has deepened and swiftly affected the rest of the world. The credit crunch is mostly brought about by the loss of trust in the lending business. Banks are just not lending to each other like they used to. Some failed banks are being "nationalized" to protect depositors. Some banks suffer from a run as scared depositors scramble to withdraw their money.

Despite the massive government bailout or rescue package for the failing financial institutions, investors' fear rear its ugly head and has come to rule. Bourses around the world have lost their market values,the magnitude of which is unheard of in the last 35 years. Billions (USD) have been wiped out from stock markets worldwide within a couple of weeks in late September and early October 2008. This is reminiscent of the Asian financial crisis in 1997/1998 though on a much, much larger scale.

The stocks went on a merry tumble and now, at the time of blogging, have virtually crumbled. The melt-down may signal a global recession. Crisis of this magnitude has humbled many an investor whose investments collectively and cumulatively help create and drive the financial system which supports the economy of the country.

Devastating as it is, what can the poor individual investor do except to sigh and wait for the financial turmoil to evolve fully, bottom out and place a mark on the new seven-year cycle! For the courageous, this is the time to buy stocks of good companies at a cheap price, with a long term horizon in mind.