|
What has caused the recent stock market turmoil? |
Our view is that a healthy re-pricing of risk is taking place. In the recent past, credit has been too easily available at the wrong price for individuals. The easy credit has inflated some asset values to unsustainably high levels in a number of areas.
Banks have begun to call in loans causing a substantial increase in the price of credit and a dramatic liquidity squeeze.
Very recent action by central banks and the cut in th US interest rates provides further evidence of the seriousness of the problems we currently face. These actions are designed to ease the immediate liquidity issues in markets. We believe that the recent falls provide a variety of great buying opportunities.
|
|