What's going on?

Markets have had a rough week � and it�s only Tuesday! But stocks did stabilize somewhat in late US trading. Here are a few key things to be aware of…

What does this mean?

US stocks are at their lowest level since April 2014 while it was October 2013 when European stocks were last this low. There has been a big flight to safety with high-quality government bonds (think: US, German and Japanese bonds) shooting up in value. Somewhat relatedly, gold has also jumped considerably in price and is at the highest level, in US dollar terms, since June last year. Oil declined 5% on Tuesday, heading back near its lowest level in 12 years. In short, there is a lot of volatility (which means big price moves � usually down!) � and lots of anxious investors.

Why should I care?

Bigger picture: The bad markets are reflecting some very serious concerns. From slowing global economic growth (read our article) to China�s currency woes (read our article) to struggling banks (read our article), there is plenty to be worried about. Some say the most concerning thing is that central banks, this time, won�t be able to stimulate the economy and financial markets out of this sticky situation (basically, the thinking is that they�ve used up all their ammunition by keeping interest rates so low for so long). There�s no shortage of things to worry about.

For you personally: But this sort of thing happens � it shouldn�t be a surprise. Investors can prepare for such things by, for example, having a balanced portfolio. That way, money that is made from owning safer investments (e.g. government bonds) can be re-invested in stocks. This is also a reminder that stocks are risky � one should perhaps not be keeping next month�s rent in the market. But, on the whole and over the long term, stocks have always gone up. That�s one major reason why having a long-term horizon makes sense.