Recently global equity markets have taken a progressive slide. This has escalated in the past week due to:
an increased likelihood of debt default in European countries
a historic first ever credit rating downgrade of the United States
Significant disappointments in recent US economic data.
Standard and Poors, the world's most revered ratings agency, were responsible for the downgrade of the US credit rating from the highest possible AAA to AA+. S&P cited the US reduced ability to pay back their debt due to unclear policy settings and political in fighting. Other agencies such as Moody's did not follow suit.
Are we there yet?
With a continued environment of high volatility, uncertainty, and social and geopolitical turmoil, investors are advised to focus more on longer term strategies and less on the current short term market volatility.
It was a crisis of confidence in our leaders and political systems to handle the current economic problems that many countries face that has fuelled market volatility. We expect this volatility to remain for sometime.
On a more positive note, the downgrade hasn't resulted in any forced selling of US Treasury Bonds. In fact the result has been an increase in buying of Treasury Bonds as the market still treats it as a safe haven.
The downgrade may be a catalyst that forces US policy markers to address the medium term problem of excess debt; a move which would be beneficial over the longer term.
In Summary
While we believe there are reasons to be cautious, as we consider risks to weaker economic growth have increased, the magnitude of the recent falls in share markets worldwide seems unjustified. We are not in the same situation as in 2008. Many companies are in much better shape than they where three years ago. We continue to see weakness in share markets as opportunities in the medium term. Investment decisions should be made with an explicit time horizon in place, which for most will mean a long term strategy that meets long term goals. As unnerving as it may be, short term volatility should not detract from longer term strategies. It is in times like these that it is important to remember the benefits of portfolio diversification and sticking to your investment and asset allocation strategy.
It was a crisis of confidence in our leaders and political systems to handle the current economic problems that many countries face that has fuelled market volatility. We expect this volatility to remain for sometime. 
