Tuesday, May 4, 2010

Interesting excuses for market crashes

I don't pretend to be a market expert. Seriously, I'm just a regular person - observing his savings and following the news.

The headlines today say: "Dow Falls Over 200 Amid Euro Worries" and "Stocks Slammed on Greece Debt Concerns; Dow Sinks 200 Points"

Now hold on one second, didn't Greece get rescued? Isn't that old news? I mean - really - did investor just now become aware of Euro-Zone issues? It seems to me that the crash today is unrelated. It's a sell off. Pure and simple. Panic. Everyone sells - so should you. (not an advise - I'm expressing the psychology of what is happening)

On the whole, there are actually reasons to be optimistic in the near and close future. The economy is improving and earnings in this quarter seem to be showing a brighter picture. Or at least those are the stories I read over the last few days.

Regardless, one cannot ignore 200+ down days on the Dow Jones. Should this volatility continue, investors need to identify its true cause, and completely ignore the manure pushed as knee jerk analysis to daily price moves.

UPDATE: Professional activists bears have set their sites and are committing an attack whilst the New York Times facilitates the ammunition; Is Spain the Next EU Country To Tumble Into a Debt Crisis?

I'm speaking without actual knowledge here, but I don't think the US-mortgage-crisis/Lehman crash and the Euro-Zone issues are on the same scale. How reliant is the rest of the world on Greece and Spain's economies?

UPDATE II: Herd psychology in action, source found. On fast money yesterday, traders were told to short EEM. So there - CNBC triggers sell off. Good luck.

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