Political unrest and soaring Oil price are all over newspaper headlines nowadays. Oil, which is hanging at 29 months high, become the culprit causing the market correction lately, again.
But if you recall the reports during financial crisis just 3 years ago, people blame oil price for increasing business cost, hurt corporate earnings and slow down economy. but when oil price finally came down, did the market stop falling? NO!
Look at the chart below, in fact, oil and stocks are more correlated nowadays
Oil Price vs S&P 500 (Source: Bloomberg)
So instead of panicking about the current situation, investors should ask themselves, are the global economy still on the recovery road.
Maybe many investors felt that the market was overvalued; Maybe many wanted to take some profits; Maybe some were simply looking for an excuse to reduce their equity exposure.
Hudge market movements are seldom at the hand of individual investors, fund managers also needed a good excuse when their funds are down so they blame oil.
Think about it.