Whew…

When I turned on the radio today after training at Keller Williams and heard that the Dow Jones was down over 500 points… I’m not gonna lie, I was a little nervous.

The last time we had a drop like that, it was right after the markets opened back up post 9/11. Not a good sign.

But my anxiety has halted a bit, we’ll see what happens tomorrow. It may be time to pick up some bargain stocks. The market has been hauling tail for the last several months without any correction. Normally these corrections take place slowly, 50 points here 30 points there, and you’re down 4 or 5 percent. This one just happened all at once, and according to Jim Cramer (yeah, the guy who is crazy on CNBC) some of the safety nets we’ve had in place to prevent this kinda thing failed us today.  But the market will be back soon enough. We’re still well over the record high for the Dow during the Dot Com Boom, and until we’re down for the year, I wouldn’t worry to much.

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6 responses to “Whew…

  1. I’m not too worried. I am in it for the long haul. Sure, my 401k will probably take a hit but I am in it for the long term. Not short term.
    It’s those people who panic and pull out that cause these kinds of markets. I’m not touching anything or changing anything.

  2. I was a little nervous but not for long. You have to have money to be nervous … and I remembered I don’t have any! 🙂

    Shalom,
    Bobby Valentine

  3. And don’t forget: capitalism can’t fail. Right, Justin? 😀

  4. Can you show us where if failed or what your def. of “failed” is Scott?

  5. Roland, relax a little. I was just messing with Justin.

  6. I’m not worried either Roland.

    I sold 75% of my position on the last bit of strength the market offered on Wed morning – and took the last train out.

    The market’s going down for a while yet. You just don’t go 4 years without a 10% correction, and 8 months especially without any kind of pullback, without paying a price. There’s no free lunch – especially in the stock market.

    A big sudden drop triggers margin calls, which triggers selling, which triggers more margin calls etc…

    But that’s nothing compared to what some blind-sided pros are facing with losses on hundred or even thousands of index futures contracts. There may be some systemic risk if big firms that bet wrong have huge losses and run into a liquidity crisis like Long-Term Capital Management did in 1998. Just hope no news like that emerges.

    Everything could be fine after a few days, but my experience and gut feel on this say otherwise.

    If you’re fully invested, you might want to sell some of the more volatile stuff into any kind of rally, to reduce your risk and to raise some cash. If you have margin debt, pray the market is merciful and pauses or rallies long enough for you to clear that debt and avoid big losses.

    I may be wrong, but even if the market turns and rallies, extreme caution is required right now. At a minimum, this is a warning shot across the bow.

    Cheers,
    Allocator

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