Login | Create Account Poll Currency Weather Facebook Youtube Search

Financial Thaimes: Keep calm and ignore the noise

As the Davos economic forum drew to a close earlier this year, there was an unusual consensus that the economic prospects for the world were positive. A week later, the Dow Jones experienced its largest sell-off in six years. As markets begin to rise back to their 2017 levels, I think it is prudent to take stock of what has just happened and how it affects your financial planning.

By Wiliam Frisby

Saturday 31 March 2018, 11:00AM

Traders reflect on another volatile day at the closing bell of the Dow Industrial Average at the New York Stock Exchange. AFP/Bryan R. Smith

Traders reflect on another volatile day at the closing bell of the Dow Industrial Average at the New York Stock Exchange. AFP/Bryan R. Smith

We’ve been here before

The Dow Jones fell by nearly 1,200 points in a single day on Feb 5 and while this figure is somewhat impressive, in percentage terms (4.6%) it is nowhere near the highest drop we have seen.

As always, the financial news outlets went crazy with the same rhetoric used in January 2016, August 2013, May 2011 and the infamous “flash crash” of 2010. “If it bleeds, it leads” is the mantra of these so-called experts, not facts and calm. Despite all the noise from the talking heads on CNBC and Bloomberg, markets stabilised and are moving upwards again.

The bottom line is we’ve been here before, and we’ll be here again. Nothing that has happened this year affects the long-term objectives of any investor.

No news is good news

Before this “crash” there was very little bad news regarding the world economy or geopolitical events that would typically spark such panic. There is uncertainty in the world, as there always is, but generally speaking the fundamentals of the wider economy provide us with optimism:

  • Positive economic growth rates are returning on the back of growth in Asia and improved outlooks in Europe and the US.
  • Corporate earnings are excellent – in the US they are at a 17-year high.
  • Price-to-earnings ratios are hovering around historical averages and do not indicate overinflated value.

I, Robot

QSI International School Phuket

As with many of the market corrections in recent history, this sell-off seems to show us the new paradigm of how modern markets operate. The volatility that we saw in stocks like Boeing highlight the problems of automated trading and algorithms.

The explosion of passive investments with automated trading strategies and highly leveraged Exchange-Traded Fund (ETFs), used largely by hedge funds, has resulted in a “selling vortex”. What might have been small market adjustments in yesteryear have become wild self-propagating swings as buys and sells are triggered automatically by “the machines” and subsequently amplified by human copycats.

One positive of this change is that it highlights how important a high-quality active fund manager can be to buck the trend and protect investors from this robotic frenzy. Markets around the world fell around 10% over this period, while the many managers reduced this fall to 5% or less. Their ability to preserve capital is a fundamental reason why we people place trust in them.

Keep calm and carry on… and ‘avoid the noise’

For many expats planning their financial future can be as long away as 10, 20 or even 30 years’ time. The “great sell-off of 2018” may continue, or it may be over, in either case, it will be forgotten as quickly as it occurred.

As always, what we saw during this drop was an opportunity. Those clients who have listened to me in the past had money to allocate while markets were down and will benefit in the future. Even with the recovery over the next few days, markets remain 5-10% below their recent record highs. We have not seen such a significant discount for two years, take advantage of it.

If you would like any more information on how savings plans work then you can go here for more details. Or, alternatively, you can email



Comment on this story

* Please login to comment. If you do not have an account please register below by simply entering a username, password and email address. You can still leave your comment below at the same time.

Comments Here:
Comments Left:
# Characters

Be the first to comment.

Have a news tip-off? Click here


Phuket community
Millions of baby crabs released into Phuket mangroves

Delighted to hear about the release of horsehoe crabs. They are wonderful animals. Now to do someth...(Read More)

Search for Phuket croc continues

Yes, the guy in the pictures is pointing to a cluster of turds, not a croc. That is really foul wat...(Read More)

While croc hunt continues, Phuket tourists rescued from dangerous surf

Sound advice from ISLA, and once again...likely to fall on deaf ears. The Governor and his minions h...(Read More)

Search for Phuket croc continues

Don't worry, after inspecting/experiencing the Phuket raw sewage beaches the croc decided it is ...(Read More)

While croc hunt continues, Phuket tourists rescued from dangerous surf

Does the Governor read english? And if so, does he read PN?...(Read More)

Ugandan females arrested on Bangla Rd for Phuket overstays

Strange how a local reporter can see all the Hookers but the police who patrol there every day can&#...(Read More)

GrabTaxi hikes ‘booking fee’ surcharge

Re: "Meter taxis in phuket?? What a joke, they don’t exist". This is, quite simply, fal...(Read More)

Search for Phuket croc continues

Wouldn't worry about the croc, be more worried about the crap in the ocean killing you judging b...(Read More)

GrabTaxi hikes ‘booking fee’ surcharge

NOTE:- The Phuket News was informed this morning that a reader took a GrabCar - not a GrabTaxi - fro...(Read More)

Phuket croc search moves to Kata Noi, beach closed to swimmers

Don’t worry «K» this ballet coming when they catch this small baby croc....(Read More)