This has spread like a wave throughout the world prompting governments to guarantee bank deposits in an attempt to allay depositors fears for the security of their savings.

On Friday 10 October, the Australian share market closed at 3939.5, a fall of 42.5% from its high in November 2007 of 6853.6. This is similar in quantum to the 1987 share market “crash” but the circumstances are quite different. In fact, our market and our economy are in significantly better financial shape and this sell down has largely been reactionary. The G7 representing the worlds major economic communities met over last weekend to determine action to stop the unwarranted sell down of company shares.

We know that many of you will be very worried about the events of recent weeks and the future of your financial security. These are the facts:

Australian banks are not at risk- in fact Australia’s banking and financial regulatory system is worlds best practice.

Australia will not be immune from the issues faced by certain parts of the world – in particular the USA  and there will be a slowing of our economy. At this time, there is no indication that Australia is likely to fall into a recession and the government maintains its expectation of a substantial budget surplus.

Whilst there may be a reduction of some company dividends, there is no indication of any major reduction and we do not expect any dramatic impact to your portfolio income. The fact that your portfolio income is diversified will have a major role to play in maintaining your income levels.

The Australian financial system is awash with money. The problem is a lack of confidence which is choking the system of liquidity and causing the over-sold markets we have been experiencing.

The markets will recover! It is simply a matter of time and our view is we are nearing the end of a long drawn out sequence of events in the USA, which has finally exposed serious flaws in that country’s financial regulatory system and financial practices.

We would point out that when your financial strategy was created, it was done so to withstand the impact of any number of market occurrences and we believe this is no exception. We are more than happy to discuss any concerns you may have and ask that you call us at any time to talk about any issues.