Following on from the historic September, October was equally eventful, marked by large market swings, negative investor sentiment, global coordinated monetary policy action and unprecedented and large scale government bailout plans for banks.Stock markets globally had a rocky month, tumbling lower on the back of increased investor panic and recession worries. The MSCI World Index suffered its worse month in October since October 1987 while MSCI Emerging Markets experienced their worst month since August 1998 (Russian Debt Default). The Volatility Index (VIX) reflected the large dayby- day market swings, hitting record levels over the month.From a portfolio perspective, rationalising the market moves by fundamentals became virtually impossible in a market led by emotion. As the month wore on and as more companies reported slowdowns in earnings, worries about global recession, its depth and duration grew. Towards the end of the month some stability was found in equity markets but sentiment remained low.Over the course of such a difficult month we looked to take advantage of the wild market swings, buying during dips and changing our stance from defensive to one of cautiously optimistic. Refraining from short term emotional decisions, we have looked to align our positions with an eye to long term perspectives. We added to equities via an ETF (Exchange Traded Fund) when markets hit a low point and although markets seesawed from that level, they ended the month higher than mid October levels.Although in the short term we are cautious with markets being led by sentiment, over the medium term we are more optimistic as rescue packages and interest cuts begin to ease the credit markets. The worst appears to be over at this point and the bear market has led to attractive valuations and buying opportunities in several asset classes.
