Wild Volatility in Global Markets

   Global Market Volatility in Perspective 

Global markets in the last couple of weeks have seen wild swings in index values, sometines by as much as 5% per day. Although swings such as these are not usually welcome by investors when they bring the market lower, keep in mind that when markets are further along in the  economic cycle,reaching euphoria, we also have wild swings such as these which cause markets to raise the value of indexes. In Canada, who can remember 300 point daily increases in hte value of the TSX? They did happen, more than once. Rememeber Nortel? Remember what followed?
   The common denominator of these wild swings is reaction, and in particular, over-reaction to news hype. Invariably, volatility such as these have emotions at their root many times.
   Since the current economic cycle began its expansion phase we have had at least 3 different emotional reactions that caused the market to fall. Greece, Japans tsunami and nuclear scare, and the US debt downgrade by S&P. Keep in mind that none of these events have caused the markets to retreat for long and that up until now, we have had two years of positive markets and postive economic indicators, for the moast part.
    It is my beleif that the current economic cycle will continue to expand led by asian countries as they are further along in their own regional growth than that of the west and Europe. This may now be the beginning of eastern countries who have lower industrialization of their workforce and thus lower wages, leading the way into and out of future economic cycles. Trade, with these countries will become more valuable as time goes on for its partners. The US economic picture has not diminished, maybe been overtaken due to its inability to consume, lend and thus grow, but the engine of the US will roar once again. Time, and some hard lessons, has not been kind to our neughbors.