I normally publish a performance review of global stock markets at the end of each month, but the meltdown around the world of the past few days necessitates an update.

“If a man does not know what port he is steering for, no wind is favorable to him,” said philosopher Seneca in 4 BC 65 AD. Why am I constantly reminded of this quote when looking at some of the rather haphazard actions taken by governments to alleviate the financial turmoil?

And this quote du jour from Richard Russell’s Dow Theory Letters of yesterday (spelt precisely the way it appeared in his newsletter): “Flash! Lowr;s reports trhat todayh was another 90% down-day, rhw rhird this week! Unbewlievable.” The R man usually has a calm demeanor, but was obviously astounded, like most of us, by the voracity of the bear.
 

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With global equities falling off a cliff, the MSCI World Index has been down every day for the past six days, plunging by a staggering 17.7% since the beginning of the month. The corresponding figure for the MSCI Emerging Markets Index is 20.1% in the red.





Yesterday viewed the third largest points decline (-679) and 14th largest percentage decline (-7.3%) for the Dow Jones Industrial Average since its inception in 1896. Five of the largest ten-point declines in history have so far occurred in September and October this year. Please see the table Dow Jones Industrial Average: Largest Points Declines.

I have added a month-to-date column to the performance table in order to reflect the past few days’ action. As I am still on a business visit in Europe, I will let the numbers speak for themselves without further comment.

I am leaving you with these words from friend Paul Kedrosky (Infectious Greed):

“If this kind of fear we're seeing in the equity markets doesn't speedily turn into some sort of bottom on the market I genuinely don't know what will. Truly. Of course, in a sense it doesn't matter. The damage has been done. The global banking system is a mess, like a patient that has been poked by too many interns and fed (no pun intended) too many experimental medicines. It's impossible to know any more whether it's the illness or the medicines that are hurting things here. And even if we have jury-rigged a semi-functional banking system again, the rapid contraction of the real economy is set to feed back into the financial system, causing more credit problems. The effects will be vicious.

“I am trying very hard to look through all of this to see what things look like on the other side. And I can see faint outlines, for sure, but that other shore still seems awfully far away.”

My sentiments exactly. Please see the following tables: Global Stock Markets: Index Movements (in Local Currency Terms) and Global Stock Markets: Index Movements(in US Dollar Terms).