What's going on?

Pretty much everything sold-off yesterday: global stocks, commodities and emerging market currencies. Only �safe-haven� assets, like US government bonds and gold, went up in price as investors flocked to safety.

What does this mean?

Investors are getting very nervous about global economic growth. This is chiefly because China appears to be growing at a much slower rate than previously expected. The weak Chinese performance (off 30% from their June peak) has spread dramatically to other Asian stocks and emerging market currencies. It has also started to affect US and European stocks.

Why should I care?

1. Sell-offs can create buying opportunities but predicting a �bottom� is virtually impossible. Investors should use sell-offs to add to existing positions in which they have long-term confidence while (hopefully) their �safe-haven� investments have insulated them from losses. This is the essence of "diversification."
2. It was looking likely that the US Federal Reserve would raise interest rates in September, but this weakness might cause them not to. A decision not to raise rates�would probably be a short-term positive for stocks and bonds. But the implicit suggestion that the economy is struggling could damper any rally.