CLIFFHANGER

Wow! Monday was a hectic day on the stock market; panic selling spread across all continents and investors may have felt anxious after a few days of market turmoil as we have got so used to several months of steady increase.

The descending curve began already early of last week which after that led to an abrupt dive in markets Friday and Monday. Monday’s big downfall resulted in the Dow and the S&P 500 wiping out their entire 2018 gains as well as OMX Stockholm seeing it’s index plunge into the negative. On Tuesday, the Nordic markets continued to be unnerved as we waited for the US markets to open. To our surprise, investors saw this dip as an opportunity to fill their portfolio with quality companies for a lower price which resulted in the Dow closing at +2,33% and the Nordic markets to recover rapidly in the afternoon.

WHY DID IT HAPPEN?

Well, there are several factors which led to the market turning downwards. On Friday last week, the U.S jobs report showed that wages had increased dramatically on a year-over-year basis in January, creating fear of higher inflation.

The second factor is an overdue correction. Some believe that automated trading played a role as the systems buy and sell stocks may have been triggered.

Finally, the third factor can be attributed to the FED, as they are expected to increase rates at a higher pace leading to higher borrowing rates which can be a challenge for businesses over time.

WHAT SHOULD I DO?

Keep calm and carry on. It is doubtful that you will time the market and therefore making your investments as part of a long-term strategy will see a better pay-off. An investor shouldn’t be anxious over a few days of losses and I certainly believe that the market will continue to be volatile going forward. So, if you are like me, a long-term investor, take these dips and buy more of the companies you cherish.