Shock, denial, regret, acceptance

By Stephen Lansdown | 19 Aug, 2008 

When I look over the events of the past year or so I think the above heading summarises everything.

It was indeed a shock to the system when the US sub-prime problems arose and affected the world. It was a major surprise when the contagion that arose from this caused havoc in the banking sectors around the world, but of course everyone denied that there was a problem in their particular bank. The various banks’ executives are now having to come clean as the results season progresses and we are seeing more and more write downs, bad debts, money raising exercises and dividend cuts from leading banks throughout the world.

Naturally such horrific disclosures results in the various politicians and banking executives being full of regret for the problems which have been caused but the good news is that at long last everyone has accepted that the financial system and various economies are in a mess and things need to be sorted out. 

The question is of course how long will this take? And quite honestly this is anyone’s guess. However with the waking up to reality taking place we are now seeing some very competitive measures being taken. Price wars in the supermarkets and price wars on the garage forecourts for example. In these circumstances the strong and adaptable will survive whereas the weak and inflexible will fail.

It is going to be extremely interesting to see which companies and stock markets fall into which category but without doubt for the brave there will be some interesting investment opportunities in the months, years ahead.