Tough question to answer Rj. Cash rates will certainly affect margin loans, selling will spook those with no conviction in their initial investments, stop losses are triggered and, as the GFC showed us, borderline companies who are redlining on their profit margins - or who are badly managed - get weeded out.
As has been pointed out by many commentators, America has a debt problem, which, ironically, has been brought about by the FED, the very same people who have been printing money in the good ol' USA and the very same people who have the power to lift interest rates. The ramifications of this go way beyond a simple explanation here.
What the last GFC taught us is that many people sold out of their stocks, only for the SP in good companies to rebound soon after. I believe their are many people who would be kicking themselves for having ever sold their shares in the first place and who are now broke, or clawing their way back, because they sold out during the GFC.
But money is still money and it needs to go somewhere. Gold - and gold mining companies - are generally considered a safe haven in economic downturns, I have a few, however, what originally drew me to consider NSL was the fact that they're in India. If America were to financially collapse I believe those with real money will be looking for the next best thing. China's had its boom and the emerging markets are still emerging. I believe in the India story and it has great potential to host the next boom. So, where does that leave NSL?
If there was to be a crash in the USA, then yes, there would be a global effect, but if you are like me, and a lot of others here, you would believe that NSL is an emerging company with a bright future. If money does flood into India, which it already has done in some areas, then I believe companies like NSL are in a great position to benefit from a global economic downturn. There may be short term pain, and let's face it, NSL are still not producing income, but if you stand by your origin reasons for buying NSL, then there's as a good chance you, and I, will not only survive a market crash - if there is to be one - we will also make some cash.
I certainly don't have all my eggs in the NSL basket but, by heck, I've seen nothing to convince me to sell any time soon.
Hope that helps. It's a very brief summary of a economic crisis but let's face it, books have been written on this subject.
GLTA
Rhama
NSL Price at posting:
3.1¢ Sentiment: Buy Disclosure: Held
