Sentiment, fundamentals….and panic

Sometimes markets move because of sentiment, sometimes because of fundamentals. Sometimes (luckily rarely), because of blind panic. The latter is what we are seeing at the moment. Investors suddenly feel they MUST sell – whether because they need the cash, have completely lost confidence, or because their family and friends are advising it.

Whatever the reason, markets then crash. But these moments, contrary to popular belief, do not come out of the blue. After the blog itself was caught in 1987, it learnt to read the warning signs, and to move aside as the moment of maximum danger approached. Thus it was able to forecast on 7 September that ‘The price of all assets will go down’.

Deleveraging, which caused today’s panic, will still be with us once markets stabilise again. This matters to the chemical industry, as it tells us whether we are in a dip, or a downturn.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. Paul is also an invited member of the World Economic Forum’s Global Agenda Council. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such as oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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