Gold price and the UAE cheap options for investors following October crash

London (Nov 4)  After almost a 10-year bull market, October was the worst month for global stock markets since October 2008, so how should investors respond?

Was it some kind of a flash crash that will soon be a distant memory as stock markets resume their long-term rise? Or have we just passed a crossroads with a major bear market ahead with share prices generally heading down, and not up?

Was this perhaps the ‘1937 moment’ hedge fund manager Ray Dalio alluded to in his timely new book Debt Crises? Back then the Fed raised interest rates - as it has done three times this year - and stocks plunged 60 per cent in value and took a decade to recover.

Last month global stock markets peaked in the first few days and then lost more than $2 trillion in value. Even Warren Buffett lost $4bn on his Apple shares. There was nowhere to hide in stocks.

But when I read an advisory in a UK newspaper last week about how a recent widow should invest her $1 million legacy I was appalled by financial experts still trotting out a combination of real estate and managed funds.

Any professional adviser ought to be aware of the danger of trying to catch a falling knife right now. In this case, stock and housing markets get scared by rising interest rates.

Sitting on cash is the only way to get a guaranteed benefit from rising interest rates. Doing nothing is much the best option.

Of course there is nothing in this investment strategy for the middleman. Indeed, that is why they almost never recommend it. Would an adviser actually go out and buy a managed stock fund in a falling market? By the time they have invested they would have lost say five per cent on commissions, and much more if the market continued to drop.

Take global real estate, outside of oil producing nations, it’s the same story. If you can see it is still declining in value then you rent and don’t buy, at least until the market stabilises.

There is a huge sum of money involved with property, usually mainly borrowed. This loan remains the same as house prices decline, so it is your deposit that gets wiped out first.

TheNational