With the announcement of the bank shutdowns in the USA and almost also Silicon Valley Bank UK, the European stock market went down heavily last Monday and Tuesday. Institutional investors usually remain quite calm under events on the world stage but private investors panic quite quickly causing the stock market to be volatile since immemorial time and easily collapsing when financial markets are disrupted or a stock listed company publishes bad quarterly results. There is a lot of speculation and doom and gloom is always on the cards.
When the market value of a stock drops it is actually the time to buy shares but curiously enough the opposite usually happens. Investors start selling en masse causing the stock to fall even more in value. If every investor would keep his cool, disasters such as we are currently seeing with Silicon Valley Bank ( CA ) whose share value dropped from $287 per share to $29 in less than 24 hours could be avoided and so could the disastrous consequences.
Of course, this is not always the case. Everyone remembers the high-profile company that had made the world press with its revolutionary speech technology : Lernout & Hauspie. Due to a multitude of malpractices, the company - in which, among others, KBC bank had invested more than 1 billion Belgian francs - had become an empty envelope. When this came to light, the fate of the company was sealed and many victims were left empty-handed.
We also saw this during the 2008 banking crisis where Lehman Brothers had wrung its own neck by insuring and reinsuring a multitude of junk loans.
As a general rule, things are not that bad, and the message is: stay calm, do not panic, keep monitoring and do not act in haste.
The European stock market is recovering from the shock of the bank failures in the USA. In the attached link, you can follow the stock prices in real time.
留言