The chart to the left captures today's market action pretty succinctly.A prominent blogger tweeted out right before the close that bloggers should put up a good post tonight because investors will be looking for answers.
I come at this much differently. Having an explanation for every big move in the market might be nice but in reality most explanations are simply guesses and not very productive.
More constructive for investors as opposed to traders, in my opinion, is to understand what the market cares about most right now and understand the fundamental backdrop. Right now the market cares about Europe and the fundamentals in Europe stink. They are trying to figure out which desperate plan of action might work best.
The best plan of action for your portfolio is to stick to whatever strategy you laid out before things got ugly.
One final note for the one reader who does not understand my humor and thinks I panic after declines and get excited after rallies; I use pictures like the dancing lemurs from the movie Madagascar when the market rallies to make fun of the ebullient sentiment that always shows up in print and on TV. I use pictures like the one on this post to make fun of the panic that sets in after days like today. In reality not much has changed. The market is still afraid of the same things, the fundamentals of Europe and the US still stink, this is still a bear market (IMO) and all of this has us back to where we were a week ago.
8 comments:
I have not analyzed the effects of today. Last night the market seemed like it was still in a bull trend and I do not expect that to change.
But this market sure is tiring
SEG
I wonder how many people, given the same market conditions and gyrations, would even be invested if interest rates on CD or MM were, say 4%.
At 4% I would sell everything, but it is not 4% and I am sticking with this bull market.
SEG
Anon 5:21,
Real or nominal interest rates?
The fundamentals of the market (earnings,margins) are quite strong. The sentiment however is horrible, as more and more market participants rely on the dismal science of the macro crystal ball, while having little to no formal economic training. Economists (the real ones) have a horrible track record of market predictions, how can we expect the untrained and unqualified macro followers to do better?
well for one thing the "untrained" don't have to worry about career risk, they can just call it like they see it
If you reversed your picture posts
..and we all followed the lead...
we could retire early:-)
you have more faith in the untrained than I do Roger. They usually find safety in crowds.
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