Is the market experiencing deja vu of 2008? In January 2016, George Soros, announced a possible repeat of the 2008 market crash, but not as severe as the crash experienced at that time. China will experience the jolt more severe than the U.S. markets.
Nevertheless, the shock waves will move through the global markets. Since January, we have experienced the shock waves in the market, although the market attempts to correct itself, it is still reverberating from the January hit. Bloomberg business discussions state that “we have a right to be nervous.”
George Soros announced at the recent Sri Lanka economic forum in January, that China is struggling to find a new growth model to stabilize the currency devaluation. Soros also states that the return to positive interest rates will be a quest for the developing world, considering the similarities of the 2008 crisis.
Moving through January and putting the new year behind us China is shifting away from investment and manufacturing and looking at consumption and services. Soros spoke of China’s problem adjusting to the financial crisis being serious, but not as detrimental to the market as the 2008 crisis.
The Soros hedge-fund firm gained a steady 20 percent each year from 1969 to 2011, having a net worth of $27.3 billion, as recorded by the Bloomberg Billionaire Index. Soros began his investing in the 1950s, moving him into the big league investors gaining his financial genius status in 1992 when he netted $1 billion on a bet that the U.K. pound would devalue. Soros acquired the tag “The man who broke the Bank of England.”
The China Communist Party has announced they will begin the gradual dismantle of capital controls and raise the yuan’s convertibility by the year 2020. Volatility is surging this year with the Chicago Board Options Exchange Volatility Index up 13 percent. The index is known as the “fear gauge” or VIX. The People’s Bank of China has already cut interest rates while the authorities pumped hundreds of billions of dollars into the economy.
During this period of market ups and down you will hear the gold reserves monitors dusting off their credentials as the price of gold increase as the market dips and rises in the financial sea of turmoil. Be alert, astute, and mindful of the world around you when managing your personal finances. Continue to be cautious investors and pay attention to market fluctuations investing accordingly.