Stock markets across the globe are suffering their worst week since the global financial crisis of 2008, due to fears over the coronavirus outbreak.
Justin Urquhart Stewart, co-founder of Seven Investment Management, explains the psychology behind why markets are so volatile.
“When things build up like this, you can’t see the future, you’re going to get volatility,” he told BBC Radio 5 Live’s Wake Up to Money programme.
He explained that the key thing is confidence, and when that goes down, people stop investing and decisions are held up.
“We saw that throughout most of last year because of the Brexit charade we had to go through, and [the coronavirus outbreak] has just added to it,” he added.
“This dissipates that confidence and therefore that’s why the markets are going down. Then what you find is that people get really frightened and start selling out, which is probably the worst thing they can do.”
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