Sputnik: So can you explain to our listeners the causes behind the biggest three-day slide since 2015?
Dominic Frisby: When you look at the big slide there's been in stock markets, people ask me, ‘why did they fall?' The answer I give you is that they've been going up too far, for too long, and they were due a fall. The gains that have been seen in emerging markets and in The Dow over the last six months, but particularly the last two months have been incredible.
If you took a chart of the Dow and cross out Dow and replaced it with Bitcoin, it would look just almost identical. The rises that have gone on in The Dow are just as big and crazy as the rises we've seen in Bitcoin. It has been a phenomenal time and essentially markets were due a correction.
Sputnik: What are the consequences of such a sharp slide like the one we've seen today on American, Asian and European Markets?
Dominic Frisby: We don't know what the consequences are because we don't what's going to happen next. If you talk to the Bears, the people who think the market is going to go down, they'll say this is the beginning of the end and we're due for another 1987 style crash or a 2008 financial crisis. There are all sorts of reasons why that could happen; there's a lot of debt and a lot of leverage in the system and people are overexposed. However, markets could just as easily turn around and rally from here and that's the great investment game — no one knows what's going to happen next.
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If markets turn around and rally from here the consequences to the broader economy are pretty much ‘business as usual'. Some people who have sold will have lost money because whatever they sold will rise in price but if the markets turn around and fall from here and we have another financial panic then we'll see a lot of belt tightening and a lot of money lost but it won't be the end of the world. It's what markets do, they rise and they fall. It's normal.
Sputnik: Finally, moving away slightly from this volatility we've seen over the past 2 days… Bitcoin is also currently experiencing a massive loss in value; with the digital coin losing 500 billion dollars in value since January… Are these two falls in The Dow and Bitcoin connected in some way?
Dominic Frisby: Well it's not just Bitcoin and The Dow that have fallen. The pound has fallen against the dollar by 5 cents over the last few days, which is a significant amount for a currency. Oil is down, gold is up — gold tends to be strong in times of panic, commodities are down. These things tend to be rising when there's risk when people are feeling bullish and fall when people aren't.
Essentially, these are volatile times. It could be the beginning of something bigger or it might be business as usual. We don't know. It's part of the fun.
The views expressed in this article are solely those of Dominic Frisby and do not necessarily reflect the official position of Sputnik.