JUST HOW FAR CAN IT FALL?
A HEALTHY CORRECTION or the end of the bull run? Who knows? But I must caution against one thing: analysts who argue that we need fear nothing more than a 5%-10% correction in share prices have forgotten their history.
The JSE all-share index may have given up this year’s gains, but that’s the culmination of a bull market that goes back into the last century. I’m not suggesting these reassuring voices are on a par with those who, when Wall Street had fallen 20% or so
A major correction is not 5%-10%, but
in 1929, reckoned the worst was over, when the market in fact had another 60% or 70% to fall.
I’m not saying that’s where we’re headed, but remember that a major correction is not 5%-10%, but 30%40%, and it would be foolish to believe we’ll never experience that sort of thing again.