The chart is a YTD of the ASX 200 (that's Australia).That it is Australia is not so important but the action the chart captures is.
If you click on it to enlarge you will see that the low close was 5186 on Jan 22 and I can tell you it closed today at 5792 which is an 11.6% snap back. That is a pretty hard bounce which serves as an example about selling into fast declines.
The decline globally from the fall was orderly and then accelerated in January, kind of a fast decline within a slow decline and like all fast declines the snap back was pretty hard.
It is easy to second guess yourself during fast moves in either direction. Second guessing is fine and if you have to sacrifice one name into a panic to relieve stress that is ok too but big portfolio changes during fast moves is probably a bad idea; 11.6% in two weeks?
I try to stress this sort of thing before, during and now (sort of) after. This has been the case with every fast decline since I have had the blog up. Fast declines, no matter when they occur (9/11 as a great example) offer some snap back.
2 comments:
With 30 minutes to go;
S&P 500 -2.7%
MSCI EAFE -4.1%
Yikes! I remember in my pre-Roger days when I held EFA and thought I was diversified.
90 minutes after close,
SPY -2.56%
SRS up 5.41% (http://blog.livememories.com/2008/02/back-into-srs-on-long-side.html)
I remember the days when i thought buy-and-hope was an investing strategy.
--Sami
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