Worst Day Since June 24. Is that good, or bad for your future prospects?
Courtesy of Paul Price at Guru Focus
Think beyond the headline & understand its implications.
September 9, 2016, was the day the mood flipped. Last Friday's dramatic sell-off broke the longest streak in more than 40 years without the indices moving 1% or more in either direction on a daily basis.
The DJIA, S&P 500 and Nasdaq dropped more than 2% each, in unison with pretty much all the rest of the world’s bourses. There was no specific news to account for the retreats. Talk of the U.S. Fed tightening before year end was the presumed trigger.
Of course, the fact that the markets reacted so badly to the idea makes its implementation even less likely than before.
The headline shown below was typical of what we were bombarded with all day long.
The message, “Biggest plunge since June 24th” implied it was time to get out as there was certainly much worse to come.
Media loves attention grabbing, click-inducing, and fear-mongering. Readers should immediately have been asking themselves, “Was June 24, 2016, a good time to be selling stocks?”
We don’t need to guess at the answer. That post Brexit-vote panic lasted another day and a half before all three major indices turned on a dime, going on to set new all-time highs. Traders who sold into the initial sell-off quickly suffered from sellers’ remorse.
Nobody can say if last week's action will mimic what took place in July and August. Why even bother trying to call the market? Just look for individual stocks which appear undervalued.
