What the Pros Say: Is Anywhere Safe?
Asian markets sold off heavily Wednesday morning as fears of a global recession snowballed with no coordinated response or an end to the worsening financial meltdown. Tokyo saw its biggest one-day percentage loss in 21 years.
European markets opened lower despite Britain announcing plans to inject up to $87 billion in capital into its biggest retail banks and Hong Kong slashed interest rates to try to stem the global financial crisis.
So where is your money safe? Here's what the experts have to say:
Rules, What Rules
There are no guidelines in this kind of market, says Laszlo Birinyi, president of Birinyi Associates. And trying to presume the bottom, he says, is pure guesswork. Birinyi has never seen so many stocks fall so quickly and believes the declines in financials have been extraordinary.
The end result: the recovery post rescue package will take some time. “The market’s not been very responsive,” Birinyi says. “We have some psychological work to do, because investors have been beaten up.” Getting beyond recent events, he says, is “going to be a grinding process.” Birinyi adds that he thinks things may get even worse, adding, “the market may go lower before it goes higher.”
Get Out of Stocks
Investors should take their money out of the stock markets, said Kirby Daley, senior strategist at the Newedge Group. Instead, Daley suggests you hold cash and sit tight as preserving your wealth is prudent at this current time.
"Start to get out (of stocks) but don't get out all at once, because you might be able to take advantage of one of these rallies. But do prepare yourself for the fact that we're going to be at low levels in equities and you can't just expect to buy and hold and expect to get returns. You need to look at other types of investments… alternative investments like getting into managers, that you can access now through banks, through IFAs, through wealth managers, that can trade the volatility, non-directional managers."
Defensive sectors like healthcare, pharmaceuticals and consumer staples can still be safe plays but you aren't going to outperform in defensive stocks in markets that are tumbling, according to Daley.
Gold and the yen are other places to be invested, Daley added.
Are Asian Bonds Your Best Bet?
In Asia's bond markets, Danny Suwanapruti, fixed income strategist at Standard Chartered is particularly bullish on South Korea and Thailand in the medium-term.
Is China Near a Bottom?
There should not be much more room to fall on the downside for the Chinese markets, says Alan Landau, president at Marco Polo Pure Asset Management.
Don't Buy the Bottom
"We are not going to see a 'V-shaped' recovery, we are going to see a recovery where we find the bottom and stay there for a long time – 12 to 18 months … don't jump in and start buying," Kirby Daley, senior strategist at the Newedge Group, told CNBC.