As we have seen twice in the past week, sudden, sharp falls in the oil price produces sharp rises on Wall Street (especially in airline shares).

Is it any wonder that bank lending is plunging in Australia, though not at the rate it is in the US, UK and New Zealand?

The impact of the credit crunch saw two banks and a financial and industrial group fail on Friday in three different countries in the most damaging day so far since the crisis started last August.

The slump in financial assets has led to negative returns for super funds. While disconcerting, occasional negative returns in superannuation funds are a normal part of the investment cycle. But reacting to the current turmoil by moving to cash will lock in losses and only lead to lower long term returns. The wisest approach is to have an appropriate long term investment strategy and to stick to it, says the AMP’s head strategist and economist, Dr Shane Oliver