Friday, August 24, 2007

My Funds and the Current Turmoil

When I started buying mutual funds, I really didn't know much about stock market. But from the very beginning I decided that I wanted to invest for a long time, so I naturally chose "buy and hold" strategy. I promised myself that I would not sell my funds in the near future, even if there was a big correction.

During these months I saw that Russian stock market mostly reacted to local news. It also correlated with the price of oil a little, and, to a lesser extent, it was sensitive to the other emerging markets' performance. There were ups and downs, but the whole financial outlook was rather positive. This August our market suddenly became aware of other countries' markets. It tumbled down because European indices took a dip, then it closely followed the DJIA performance, after that Asian indices plummeted, so our market took a huge dip, too, and then turned back to the US. It doesn't care at all about the local data. Our market and my funds are just following the rest of the world.

Of course, I don't know what will happen next. I can't predict the consequences of the mortgage crisis, and I also can't say how it will influence the economy of my country. I still stick to my funds. When Russian indices were 10% lower than their recent historic high, I bought some more. We'll see how it will turn out.

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