Markets will not slow down

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Between October 28 and November 14 that year – a space of 17 days – the market experienced five equally substantial daily movements

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Even in the financial crisis of 2008, although there was some massive market volatility, the biggest moves in the S&P 500 were spread over more than two and a half months. In that year, there were five substantial daily swings between September 10 and December 1.For investors, a question worth asking is whether the pace of market movements in March is another once-in-a-century event, as the similar period in 1929 turned out to be.

This has implications for how quickly share prices go up and down, because there is a truism in investing that markets move faster than information.“The ubiquitous nature of today’s social media and news platforms means that news or information is disseminated a lot faster than when you had to wait for your newspapers the following morning,” points out Iain Power, chief investment officer at Truffle Asset Management.

An additional complication this creates, says Power, is that there is now too much information, and it’s difficult to determine what is both true and relevant. “Capital markets are discounting machines, and they are very good at anticipating bad times such as recessions, but they over- and under-react to the news based on ‘perceptions’ and the ‘psychology’ of behavioural science,” Rousseau says.

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