Heritage Financial Services: Stock Market Commentary December 2007

Stock Market Commentary December 2007

Global Stock markets have experienced a difficult four month period. August was a particularly volatile month for global stock markets, which weakened during the first half of the month on another round of investor nervousness. Equities tumbled as problems in the credit markets deepened and liquidity evaporated. The second half of August was almost a mirror image of the first, however, as stocks rallied, bolstered by moves from the US Federal Reserves and other central banks aimed at easing problems in the credit markets.

Global equity markets declined during September, October and December due to further US subprime related fund losses, and negative news about the state of the US economy. Poor housing and employment data from the US has fuelled investor fears that the world’s largest economy may be slowing down, or even heading towards a recession.

Everyone will have heard or read by now the problems with Northern Rock. This has been caused by the subprime mortgage markets in the US. Central banks are no longer shovelling out shed-full of money to banks like Northern Rock who rely on people like you and I who want to borrow money to make them profits. Generally, the bank will borrow money from a central bank at an agreed rate and then sell it onto us borrowers at a higher rate of interest and this income stream is then reinvested into other assets such as stocks and shares, hedge funds etc.

The outlook I’m afraid will be quite stormy for the foreseeable future, probably at least until the second half of 2008. My advice will be to stand firm throughout this period. As long as you do not sell any units or shares and hold on to them, then you will be rewarded for your resilience. It is only the investor who sells at the wrong time that will make a financial loss.

		Heritage Informer
	Articles Stock Market Commentary December 2007 Global Stock markets have experienced a difficult four month period. August was a particularly volatile month for global stock markets, which weakened during the first half of the month on another round of investor nervousness. Equities tumbled as problems in the credit markets deepened and liquidity evaporated. The second half of August was almost a mirror image of the first, however, as stocks rallied, bolstered by moves from the US Federal Reserves and other central banks aimed at easing problems in the credit markets. Global equity markets declined during September, October and December due to further US subprime related fund losses, and negative news about the state of the US economy. Poor housing and employment data from the US has fuelled investor fears that the world’s largest economy may be slowing down, or even heading towards a recession. Everyone will have heard or read by now the problems with Northern Rock. This has been caused by the subprime mortgage markets in the US. Central banks are no longer shovelling out shed-full of money to banks like Northern Rock who rely on people like you and I who want to borrow money to make them profits. Generally, the bank will borrow money from a central bank at an agreed rate and then sell it onto us borrowers at a higher rate of interest and this income stream is then reinvested into other assets such as stocks and shares, hedge funds etc. The outlook I’m afraid will be quite stormy for the foreseeable future, probably at least until the second half of 2008. My advice will be to stand firm throughout this period. As long as you do not sell any units or shares and hold on to them, then you will be rewarded for your resilience. It is only the investor who sells at the wrong time that will make a financial loss.

Home Investments Insurance Valuations Portfolios About Us News
		Quick Links: Knowledge Base Contact Us home Why not make 2008 the year you resolve to get your finances in order with a Financial HealthCheck from the Experts at Heritage..

Articles