Don't panic!

The reason why I am saying this is because it is too late! The dark clouds have been building in the world markets for a while now. We have written about it and we have read the predictions. So now that the panic is setting in, the frail rationality of human beings is collapsing in a heap.

If you were prudent in your investment planning, you will be in a position where you can sit on the sidelines because you will have enough cash to see you though this bad patch. If you are an investor of new money, you are buying assets at 15% less than a few months ago!

For the most part I think it is more negative sentiment than anything else. The main culprit of this negative sentiment is the continuing slowing down of the Chinese economy. This causes the further drop in commodity prices and lowering of oil prices.

This might continue for a while and I am sure that marginal companies and even economies will be wiped out. It is like a bush fire that burns hot and moves fast. It takes away all the grass but leaves the trees. As a South African investor, your offshore investments are protecting you against the worst because of the depreciation of the Rand (beautiful to see diversification paying off).

Just don't panic and sell your equity investments. Markets will bounce back one day and if you sell out now and put your money in cash, I can almost guarantee you that you will not get back into the market in time for the bounce.