Michael Gordon, head of investment strategy, Fidelity International - comment on market conditions

"The precipitous falls on world equity markets since the start of the year confirm what many of us have suspected for a while -

the credit crunch that began in the US sub-prime mortgage market last summer is having a profound impact on the real global economy." This weekend's market turbulence has two connected causes: a growing consensus that the US economy is moving into recession and the emergence of real difficulties among the bond insurers - the so-called monoline insurers - as deals done when credit was readily available continue to unravel.

The de-coupling theory that Asia, and China in particular, would bail out the markets of the developed world also now looks faulty.

"Many in markets are pinning their hopes on the actions of central banks.

Today's dramatic three-quarter point cut in interest rates from the US Federal Reserve appears to have given fresh heart to traders, but it is possible that such a large reduction in the cost of borrowing may be interpreted as panic on the part of US policymakers faced with the prospect of a recession.

"So what should investors caught up in this maelstrom do? My suggestion is that they do nothing: history shows that this is usually the best course of action in such situations.

All too often private investors are sucked into a market at its peak and then exit at the bottom.

Tempting as it might be to withdraw money when markets drop sharply, this merely crystallises an individual's losses.

"For our fund managers, the volatility has a silver lining.

The sell-off brings many more opportunities for those willing to take a long-term view.

Some of our portfolio managers believe that financials, one of the hardest hit sectors since summer 2007, are beginning to look attractive at their current levels.

The shares of property companies have already begun to recover after losing more than a third of their value last year.

"How will the market end the year? Before Christmas I forecast that UK equities would finish 2008 10% lower than they started the year.

The FTSE 100 Index has already fallen by almost 15% since January 2.

I stick by my original forecast: conditions could easily worsen in the short-term, but I am optimistic about the second half of 2008.".

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