Studio Guest – Bernhard Jünemann, Börse Online

This week our guest will talk about the effects of the financial crisis on stock exchanges and the global economy. DW-TV: Obviously we'd like to know, how are your stocks doing? Bernhard Jünemann: Badly. Honestly. But fortunately I have relatively few stocks and have reduced risk in the developing of the crisis. That's what you have to do if you're active in the stock market: if there is a crisis, if there is trouble, you have to reduce your risk, and if it's going away, you can take more risks. DW-TV: Stocks and shares, they do have this terrible habit of not only going up, they're also going down - it's part of their nature. For example, looking at the DAX between 1998 and 2008, there's been a lot of up and down over the years. Though lately, it's been mostly down by some 40 percent in the last year alone. And we can also see, we've had huge drops before - in 2003, for example. What's different this time? Bernhard Jünemann: The difference is in the participation of private investors. 2000 to 2003, we had many, many private investors taking part in the stock market. This was the time you went to the hairdresser and you had to discuss stocks. So, that's over. And therefore we had this very strong downturn because many people wanted to get out of the market through the same door. This time it's more of a professional crisis and, we have to say, this time the crisis was not started from the stock market but from the banks - from the American housing markets and the banking crisis following it. The stock market itself has reacted relatively late: only really when it was clear that this is a systemic crisis for the banking system. DW-TV: But that is actually something that puzzles me now, because, as you mention, it started with the banking crisis and that sort of started August 2007, that's when the news hit, so there was ample time to prepare. Why did financial experts, like yourself not ring alarm bells? Bernhard Jünemann: Because there's always hope. This is the big problem in the stock market, there's always hope: the idea was, at that time, the, say, emerging markets are very strong, they're affected that much, so probably they'll bail out the American economy and it won't come that badly. So, it is the problem of human behaviour. If you have a trend and believe in the trend, it's very difficult to make a U-turn, so therefore there were warnings, enough warnings, but nobody really could imagine at that time that the banking crisis will lead to a real systemic crisis. DW-TV: But that sounds like we can't learn from any crisis, can we? Bernhard Jünemann: We can learn to some extent. The first lesson is there will always be crisis, so that means if you have to manage your money, manage it in a way that you can survive a crisis. You will never know when the crisis starts, but you alway have to prepare your funds in a way that you can survive the crisis. Then you're on the right side. DW-TV: If you are daring now, would it actually be a good time to buy bonds and shares because the market's down, but trust is now obviously a word of the past. So which corporate or private investment - how can you restore that trust? Bernhard Jünemann: With rising prices. When we have a longer period of rising prices again in the stock market, then trust will come back. That can be several years from now. (Interview: Monika Jones)

DW-World | October 21, 2008

Tags:. .many. .because. .week. .american. .online