When my brother and I were children chopping wood, we had to roll the heavy logs down a hill to split them on flat ground. Once a large piece gained momentum, it seemed destined to reach the bottom, only to be stopped abruptly by a cedar tree.
That is essentially what occurred last Tuesday. As the South Korean market crashed and European markets began to slide, the tech-stock decline hit a wall when it collided with the resilient U.S. <a Sell-Side Sidecar" mechanism, which forces a temporary halt in trading. Shortly after, I noticed that European markets were also trading in the red halfway through their day. I braced myself for a difficult session, but the anticipated downturn never materialized.
On that Tuesday, the South Korean, Japanese, Hong Kong, German, and European Union exchanges all finished in negative territory. Meanwhile, the U.S. Nasdaq Composite closed down just 0.2%, effectively remaining flat. Why did the volatility subside upon reaching U.S. markets? The answer lies in the broader composition of our index.
Roughly half of the South Korean index is comprised of just two Financial, a registered investment advisor, Member FINRA/SIPC.
Opinions voiced above are for general information only & not intended as specific advice or recommendations for any person. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
The economic forecast outlined in this material may not develop as predicted & there can be no guarantee that strategies promoted will be successful.
Fervent Wealth Management is a financial management and services entity in Springfield, Missouri.
