Back in late December 2008 I said there would be some sort of very big feel good rally which obviously started in March 2009 and on March 11, 2009 I blogged the following;
While I have no idea whether yesterday (March 10, 2009 when the market went up 6%) will be the start of something really big or a one day wonder I do believe we will have a huge rally at some point that makes people start to feel good again followed by another big decline that scares the hell out the same people who felt good on the way up.
The proper context here is not that anything was predicted, clearly the timing was not helpful in the least, but that I simply regurgitated some rather obvious observations gleaned from past market events. I mentioned in that second post yesterday that people seem to forget what declines actually feel like and at some point these same folks, still with no pre-planning in place, simply react to the selling by doing some selling of their own.
The cycle of feel good rally followed by a scare the hell out of them decline, regardless of the time lines in question, is a very bankable market behavior. I do not know if this is the decline that will scare the hell out of anyone or not--it would need to go lower than this I think in order to be cathartic.
The importance of these sorts of very predictable market movements, to the extent our clients read the blog, is that if you've been reading for the last many months that scare the hell out of them declines are normal and bound to happen at some point you are less likely to be one of the ones who gets the hell scared out of you--you knew this would come at some point so what is there to be scared of?
I think it is actually very comforting to know that while the details now seem to be different and scarier (this is always the case in the current event) the market is behaving in a very similar manner to past events; feel good rally followed by a scare the hell out of them decline (now or maybe later).