#MarketTurbulence – When the Market Becomes Turbulent

is a concept that describes the periods when the financial market becomes unstable and experiences significant fluctuations, typically manifested by large price volatility, decreased liquidity, and widespread investor anxiety. This situation can arise from various causes such as political instability, changes in interest rate policies, or global economic shocks.

One scientific approach to measuring the rate of change is the Turbulence Index – an index based on the Mahalanobis distance between current returns and historical average values, helping to determine whether the market is behaving unusually. When this index spikes, it is often a signal of a potential financial crisis or a prolonged period of turmoil, such as the 1987 crisis, the COVID-19 pandemic, or war.

For investors, the turbulent market is not just a threat but also a profound opportunity. An article in the Financial Times recommended: instead of panicking, view volatility as an opportunity to seek valuable investment chances, discover undervalued assets, and take advantage of temporary market distortions. However, organizations like Barclays or financial advisors still emphasize the importance of staying calm, maintaining a long-term strategy, and avoiding emotional reflexive reactions when the market falls into chaos.