I was reading on CNBC when I came across an article titled, "Jamie Dimon says ‘brace yourself’ for an economic hurricane caused by the Fed and Ukraine war" [article]
The head honcho of JPMorgan Chase was speaking at a financial conference in New York on Wednesday when he uttered,
"You know, I said there’s storm clouds but I’m going to change it ... it’s a hurricane ... You’d better brace yourself ... JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet."
These are very strong words indeed. It seems the global investment bank is preparing its clients for not just a downturn, but a huge slump in the economy and the markets.
Sadly, I don't have excellent foresight as Dimon, so I cannot say for sure whether this economic disaster is going to strike or not. But if history is any guide, I would say our local stock market hasn't baked in any of that possibility.
During the 2007-2009 Global Financial Crisis, the Straits Times Index (STI) declined 62% from peak to trough (11 Oct 2007 to 9 Mar 2009).
During the 1997 Asian Financial Crisis, the STI also retreated 61% (17 Feb 1997 to 4 Sep 1998).
Right now, the STI has only fallen 6% from its peak on 5 Apr 2022. We still have a long way to go when the shit hits the fan.
Naturally, such a recessionary event does not manifest quickly, not like when the COVID-19 pandemic struck and STI crashed 30% within the span of one month. It would be akin to a tango between the bulls and the bears - one step forward, two steps back.
In any case, it is always good to be mentally prepared for a precipitous drop in your portfolio market value, and have emergency funds set aside for unexpected expenses.
Personally, I maintain some liquidity in my DBS Multiplier account to tide over any unforeseen circumstance. I also have a separate cash stash for investing in the companies on my watchlist if and when the prices hit my target entry level.
As the cliché goes, be greedy when everybody is fearful. Our mettle as savvy investors may well be tested soon.
The head honcho of JPMorgan Chase was speaking at a financial conference in New York on Wednesday when he uttered,
"You know, I said there’s storm clouds but I’m going to change it ... it’s a hurricane ... You’d better brace yourself ... JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet."
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| An economic hurricane on the horizon? (Photo credit: Unsplash) |
These are very strong words indeed. It seems the global investment bank is preparing its clients for not just a downturn, but a huge slump in the economy and the markets.
Sadly, I don't have excellent foresight as Dimon, so I cannot say for sure whether this economic disaster is going to strike or not. But if history is any guide, I would say our local stock market hasn't baked in any of that possibility.
During the 2007-2009 Global Financial Crisis, the Straits Times Index (STI) declined 62% from peak to trough (11 Oct 2007 to 9 Mar 2009).
During the 1997 Asian Financial Crisis, the STI also retreated 61% (17 Feb 1997 to 4 Sep 1998).
Right now, the STI has only fallen 6% from its peak on 5 Apr 2022. We still have a long way to go when the shit hits the fan.
Naturally, such a recessionary event does not manifest quickly, not like when the COVID-19 pandemic struck and STI crashed 30% within the span of one month. It would be akin to a tango between the bulls and the bears - one step forward, two steps back.
In any case, it is always good to be mentally prepared for a precipitous drop in your portfolio market value, and have emergency funds set aside for unexpected expenses.
Personally, I maintain some liquidity in my DBS Multiplier account to tide over any unforeseen circumstance. I also have a separate cash stash for investing in the companies on my watchlist if and when the prices hit my target entry level.
As the cliché goes, be greedy when everybody is fearful. Our mettle as savvy investors may well be tested soon.
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