Monday, February 8, 2016

Lost half-decade for the world markets

Japan’s lost decade is a well known thing of the past and studied by many. But now it is time for the entire globe to witness the same. 2010-2015 seems to be lost five years for the financial markets. Be it Dow Jones or DAX, they are already at two at years low and breaking the long term supports which may open the gates to another 20-30% fall in this year that will take them to where they were in 2010. 

Copper is going back to 2008 levels and Crude is already below that. For crude it is already a lost decade. For others it is not yet, but if the slowdown continues for couple more years, 2009 to 2019 has the potential to become a lost decade for world’s equity and commodity markets.

Reforms of Modi or Obama, policies of Bernanke or Rajan would have helped their respective economies from getting worse but they do not seem to offer any resistance to the market forces which are at play now.

If you are an equity or mutual fund investor, your investments would be showing negative returns. Accept the reality, you knew stock market investments were risky. And playing for a V-shaped recovery may not be wise. Probably it is time to sit on the sidelines for indicators to turn around.