Panic is the bitterest enemy of traders, and they have succumbed to emotions once again. The recent crash on the global stock markets was disastrous and steep specifically due to panic. Adena Friedman, the President and Chief Executive Officer of Nasdaq, supports this point of view. After panic overwhelmed traders, a plunge grew faster. One selloff triggered another, gathering momentum like a snowball.
Under such conditions, few people had the confidence to wait patiently. The market turmoil prompted investors to withdraw their funds. Adena Friedman noted that “the U.S. economic data in recent weeks had created a common view among investors that the Federal Reserve would soon increase interest rates.” At the same time, bank analyst Dick Bove said that the market crash was contributed to a wide use of automated systems for managing investments on stock exchanges.
A small number of financial sharks managed to keep calm, calling all this fuss just a prelude to a correction. Thus, IMF Director Christine Lagarde said that there was nothing to worry about. Optimists hope that the panic will fade away in the nearest future.
