Weekend Reading: Breaking Markets
by Lance Roberts
Real Investment Advice
This week has certainly been interesting with the Dow Jones Industrial Average having the worst start to a year…well…ever. Even more interesting is the culprit was primarily the collapse of financial markets in China.
Why is that interesting? Because it is exactly the issue that I wrote about during the summer of 2015:
“And this last week, we saw what happens when things go ‘inevitably wrong.’
The perils of margin debt should not be readily dismissed. For a real time example of financial market leverage and consequences, one needs to look no further than the Shangai Index in China. That market is in a complete collapse as plunging prices are forcing investors to sell shares. While the Chinese government has injected liquidity, suspended trading in almost half of the listed equities and encouraged pension funds to buy securities, these actions have done little to stem the decline as investors ‘panic sell’ in a rush to safety. That collapse, if history is any guide, is likely not done as shown in the chart below.”
Continue Reading at RealInvestmentAdvice.com…
Source: http://financialsurvivalnetwork.com/2016/01/weekend-reading-breaking-markets/?utm_source=rss&utm_medium=rss&utm_campaign=weekend-reading-breaking-markets
