Another bloodbath on the markets - it feels a lot like 9/11
Today saw another bloodbath on the markets in the wake of COVID-19.
Wall street trading halted briefly, gold slumped and platinum fell sharply.
David Shapiro is a veteran of five decades of market booms and busts.
The Money Show wanted to know how rough this feels compared to other unstable times.
Today we live in an internet world or in a world where most of the markets are run by high-speed computers and high-frequency trading. There is an enormous amount of gearing. You can borrow as much money as you want and take the bets that you want without any interest costs you can really gear your portfolio up. The speed at which we've seen the markets fall is just an unwinding of some of those positions. But the nature of the fall is no different from a lot of falls we've seen. For me what it looks like is 9/11 - where we were not expecting anything. We also saw that with the internet boom - when the internet bubble burst. But with 9/11 - nobody knew that was going to happen. People locked themselves up, they were scared to go to restaurants, they were scared to go to gatherings fearing further attacks.David Shapiro Deputy Chairman - Sasfin Securities
But we recover from these things. So brace yourself, we are going to recover.David Shapiro Deputy Chairman - Sasfin Securities
You know where you pick this up (the panic) - it's not only in equities - but if you look at the palladium price - you know we were celebrating this massive gain in palladium. But today it came back...18 per cent... every minute it changes. We saw the platinum price being pummelled. Everybody says in times like this go to gold but gold has come down dramatically. We saw the same thing in 1987, the same thing happened, when we had a 20 per cent fall almost in a day and everybody ran to gold and within a few days gold had lost all its gains as people sold out or as markets started to recover.David Shapiro Deputy Chairman - Sasfin Securities
Listen to the interview below.
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