Deakin Business School's finance Associate Professor Victor Fang has warned mum and dad investors to brace for ongoing volatility in global markets as panic selling continues to drive shareholders toward the equity exit doors.
Associate Professor Fang urged everyday investors to “hang in there” and ride out the current cycle of fear and overreaction.
'For as long as uncertainty and fear rule global equity markets, the rollercoaster ride will continue for Australian investors,' he said.
'But the core fundamentals haven’t changed, so mum and dad investors should hang in there and see through this period of uncertainty and diminished confidence – don’t just sell for the sake of it.'
Associate Professor Fang said China’s misguided attempts to find a circuit breaker for its falling share market was a key contributor to the fall of Australian markets this year.
'China’s market intervention – to suspend the trading of shares in companies which have fallen five per cent – is only increasing selling pressure,' he said.
'In a slowing Chinese economy, such circuit breakers send a signal to investors that something is not right and that adds to the fear and anxiety.
'China aside, the Greece debt problem has not been solved and the refugee crisis gripping Europe will put more pressure on national economies already under a great deal of pressure.'
Keeping one eye on real-world markets, Associate Professor Fang also watches over the Deakin Business School’s Telstra Trading Room – a cutting-edge training ground for the next generation of finance experts.
Based at Deakin's Burwood Campus in Victoria, the trading room simulates a real inter-bank foreign currency trading floor, complete with pods for 15 banks, named after real Australian and international institutions, and state-of-the-art equipment including tickers, ASX and Bloomberg feeds on the trading wall.
'The Telstra Trading Room enables us to teach our students to trade in a space that looks and operates in the same way as the trading floors of major banks and corporations around the world. The only difference is that our students are trading in virtual money,' said Associate Professor Fang.
“Not only do we teach the theory of trading, we challenge our students to take that knowledge and apply it to real-world economic scenarios. This way our students are exposed to the risks, pressures and strategies experienced in real-world currency trading.'
This story was sourced from the Deakin newsroom.