So, did the market bring that s&#@ to us yesterday?Well, unfortunately I don't know. It is clear that this is an important micro (in the sense of time) event that is still unfolding. Fast moves like this, regardless of when they come are obviously dislocations that often trigger a snap back.
As this is a bear market I would expect a snap back to be short lived, a couple of weeks or so, but these snapbacks are the essence of feel good rallies.
We just had one that started on July 15th that took the S&P 500 up 8% in about a month. At the same time the financials, as measured by Financial Sector SPDR (XLF), were up 30%.
The last feel good rally did not mean the end of the bear and this one, if it comes, won't be the end of the bear either. Hopefully you avoid meaningful selling on days like today or yesterday and avoid meaningful buying on days like August 11.
The reason I write so much about how bear markets work, how they happen every few years and so on ties in with a comment I made yesterday about knowing ahead of time that bear markets come. I believe that the more you can deconstruct bear markets, understand that they are normal, realize your account will go down at least a little the less likely you are to panic. No one gets every decision right but your percentages probably go up if you never panic.
7 comments:
Don't panic - good advice
But, I do not know why you predict a rally. We may not go down today, but it is not clear to me we are due for a rally yet
very fast moves almost always snap back the other way for a time. i'm not trying to say a snapback starts today, just that one will come soon as a function of normal market action.
Roger,
For a long time, I agreed with you and kept telling myself this is a "normal" bear, but I'm starting to question that. The latest "tipping" point is The Reserve Fund breaking a buck. I know that last summer, I believe, it was Sentinel (?) that broke a buck, but that wasn't a "retail" fund.
I'm starting to think that an event that impacts Joe 6 Pack directly might just be the final straw...something like MMs going TU, or WaMu circling the drain, etc. Despite whatever the economic impact of things like the BSC or LEH affairs might be, I think they remained pretty much under the radar for the average man in the street.
you maybe correct, maybe this will not be a normal bear but as for breaking the buck; a couple of funds broke the back earlier in this cycle, and then went back.
In 1994 (I believe it was 94) there were two funds that broke the buck, one from Piper Jaffray and I forget the other.
this time might be different (not my opinion) but breaking the buck isn't different.
Roger- just curious if you had time yet to review Rudy Aguilera's option strategy? thanks
Your current, new, posts no longer show up on the RSS feed on My Yahoo.TIA
been a little busy
the RSS seems to come and go. it was not working on MY Yahoo either and today it is.
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