Global stock markets experienced historic levels of volatility this week, unnerving governments, finance officials and investors around the world.
Much of the blame has been directed toward the Bank of Japan, where officials appeared to signal a shift in policy, one that would upset long-held expectations and undermine investing strategies based upon them.
That is too simple a telling, however. Developments in Japan are not sufficient to have triggered all of last week’s ructions. A confluence of factors was responsible, several of which originated in the United States, with an impact that befits that of the world’s largest economy. The volatility is a reminder of the need to constantly check assumptions and be ready for swings in a deeply connected global economy with instantaneous communication. Investors must be more alert to the need for diversity and resilience in their portfolios and ever ready for instability.