History shows markets rebound after a crisis

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Russia’s threat to invade the Ukraine has sparked volatility across sharemarkets but it may not be as bad as investors fear.

is a reminder to investors of how markets behave in a crisis – and what to expect if Russia does follow through.

The rebound from the fall is even faster: 23 out of the 29 events, or 86 per cent of the time, the benchmark was, on average, 7.6 per cent higher a month later. A year later, the market bounces back by an average of 24.7 per cent. “The pattern is ingrained because each generation tends to forget the lessons of the previous one. Over the short term, markets tend to overreact to negative events and react more slowly to positive ones. Invariably it’s because investors have short memories.”Oliver notes that a prudent strategy for long-term investors is to hold their nerve and look for buying opportunities, but adds that volatility is likely to persist in the short term.

Russia produces 17 per cent of global gas and 13 per cent of global oil, according to ANZ, while also supplying 15 per cent of traded thermal coal and 14 per cent of traded coking coal.

 

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Think WW2 was worse than portrayed here alex_gluyas

Then why even react? 🎢

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