Is This the Big One? What to Do in a Financial Crisis

If it seems we've focused on crises for years, that's because we have. Are the events of the past few weeks simply another temporary shock to the global financial system, or indicative of something much bigger? Before panicking, we need to ask and assess, "Is this the Big One? What do we do in a financial crisis?”

  • Greece, China, NYSE trading halt: are these crises the Big One? If the answer is no, don’t head for the proverbial hills.
  • During major crises, there are very few safe havens for investors.
  • The Big One rarely happens; market reactions are often mistakenly born out of panic.
  • Be wary of “inoculation” investments (such as gold) which often turn out poorly, and rarely outperform after the “crisis”.
  • Don’t let crises go to waste: many investments that sell-off in the short-term have little fundamental exposure to the specific reason for the sell-off.