LONDON, England - How long can this go on? We seem to be locked into a terrifying cycle: stocks suffer days of sell-offs, followed by a powerful bounce. But just as we start wondering whether this market slump will follow the same pattern as its ugly predecessors of 1987, 2001 and many others and hit bottom, the same pattern repeats itself.
Traders at the New York Stock Exchange, where share prices have fluctuated strongly during the past few weeks.
It's three steps back, then one step forward – and over the past few months it's been repeated more times than I care to remember. To make matters worse, there never seems to be that much rhyme or reason to the selling or the buying. One day share markets worry themselves sick about global recession, then the next day all that is outweighed by some random piece of supposedly good news. A few hours later a renewed slide on stocks in another time zone has investors back in panic mode, and we're off to the races again.
Market insiders point to several underlying factors, notably the aching uncertainty about where the credit crunch and the world's leading economies are heading. But they say that what is clearly adding to the volatility is a frenzied scramble by hedge funds to move out of stock markets and also to make money for their investors by whatever means they can dream up. The betting is that they are both creating a lot of the volatility and riding it at the same time.
To add to the craziness, we are seeing some violent swings on currencies, with the Japanese yen and to a lesser extent the dollar (given the relative security of US Treasury bonds) now the safe havens of choice amid the carnage of "global deleveraging".
With previous sell-offs, there seemed to be a clear end to the selling. It may have taken a while to come along, but in the end the bargain-hunters stepped in and there was a gradual return to normality, and then to sustained growth in share values.
So where are we now? When Warren Buffett said a couple of weeks back he thought Wall Street stocks were a buy, he may have been right about their current puny valuations, but not about whether those valuations could get even punier.
Speaking on Business International on Friday, Robert Parker, Deputy Chairman of Credit Suisse Asset Management, was a lot more cautious, predicting the return to a bull market would not come until the middle of 2009.
That would certainly be a few months before the predicted end to the current global slowdown, which most economists I speak to seem to think will only loosen its stranglehold at the far end of 2009.
What do you think? If so illustrious an investor as Warren Buffett thinks we're close to the bottom, should the rest of us pile into stocks in hopes of rather decent gains within a couple of years? Or has even he got it wrong? Watch what Tom Hougaard, chief markets analyst at City Index thinks of your opinions
Famed investor Warren Buffett says it's time to go shopping.
Warren Buffett says buy but is it good advice for everyone?
In an editorial in Friday's New York Times, Buffett says, "...fears regarding the long-term prosperity of the nation's many sound companies makes no sense."
The Oracle of Omaha, as he is known, went to great pains to insist he is not calling the bottom for U.S. stocks. "I haven't the faintest idea whether stocks will be higher or lower a month - or a year - from now."
But he clearly feels the environment of fear has created great opportunities. "A simple rule dictates my buying: Be fearful when people are greedy and be greedy when people are fearful."
Easier said than done!
This week alone, the Dow Jones Industrial Average rose 933 points Monday. On Tuesday, the market ended down 76 points Tuesday, after swinging 700 points intraday. On Wednesday blue chips tumbled 733 points. On Thursday, the Dow fell 400 before turning around and ultimately rallying over 400. Watch Bob Parker of Credit Suisse discuss your respsonses to this week's Business 360 blog question
These moves used to happen once every couple of decades. Now they are every day occurrences. The volatility has unnerved even the most seasoned investors.
Should you follow Buffett's advice and jump in?
Experts say that depends on two things; your age and your current exposure to stocks. If you are young, Lakshman Achuthan of Economic Cycle Research Institute says Buffett's advice is sound.
He thinks it is a good time to start nibbling at companies that have good management and are leaders in their business.
If you are nearing retirement and might need the money in a year or two, Achuthan thinks it may not be a good idea.
Buffett is a long-term investor not - as he himself points out - a market timer.
Stocks may well go down before they ultimately recover. Also, Buffett can afford to take some risk now, because he has been sitting in cash.
He has not been hurt by the staggering decline stock market of the last two months. If you have lost 20-40 percent of the value of your investments, you may not want to risk losing even more.
Why would Buffet show his hand? Some may think he is talking up his position, but that doesn't really fit with his personality.
Analysts I talked with say it is likely he is doing so out of a sense of concern.
He knows investors are "un-moored" as one put it. Individual investors are confused and looking for guidance. The professional money managers are looking at computer models that don't go back far enough to work in these markets.
Buffett has the benefit of experience and a tremendous track record.
Do you agree with Buffett's call? Do U.S. stocks look like a good buy or do you feel investing in Wall Street is a dangerous game?
LONDON, England - A huge sigh of relief that authorities have been pulling out all the stops to try and restore confidence in the banking system.
Following the plunge in markets last week, governments and central banks had their backs against the wall to do something quickly and something that addressed the central issues.
Investors for now seemed satisfied that leaders finally realised the enormity of the crisis and acted decisively.
This is a critical step and should help relieve some of the funding stresses seen in the credit markets.
As Goldman Sachs put it: "Taken together, the latest moves increase the chances that we will begin to see some relaxation of the intense funding stresses. This is because solvency risk should decline as the government offers protection."
Banks have been reluctant to lend to each other out of concern they won't get paid back, concerns heightened following the failure of Lehman Brothers.
Even well-run companies have found it tougher to get credit. A well functioning banking system is the lifeblood of any economy.
The question is whether the worst of the market rout is over? It's unclear. One thing that is clear, had authorities not taken bold steps over the weekend, the selling would have accelerated, further undermining confidence in governments ability to act and further damaging the financial system and economies.
As I mentioned in my previous blog, it's too late to avoid a global recession. The work of central banks and governments isn't over.
There are expectations that central banks will cut interest rates further and there's pressure on governments to stimulate their economies.
This is the worst financial crisis since the Great Depression, coming out of it will be a long and painful process.
Do you think the steps governments and authorities have now taken will be enough to restore confidence?
How long do you think the economic downturn could last and how deep could it be?
Do you think stock markets have already fully discounted the worst of a global recession?
Tell me what you think.
About Business 360
CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.