The Five Stages of Panic Buying
by ilene - August 28th, 2009 8:24 pm
In the end, it appears, panic buying, like panic selling, is all too human. Joshua M. Brown explains. And, welcome Joshua, thanks for contributing to our Favorites! - Ilene
The Five Stages of Panic Buying
Courtesy of Joshua M Brown, The Reformed Broker
I talk to a ton of traders, portfolio managers, brokers and high net worth investors, both on and off Wall Street. Most of them have engaged in a bit of panic buying at some point this summer as the 50% rally in US stocks surprised many smart players.
Panic buying is what happens when you run money for a living and you feel like you’re missing a huge upside move. To make up for lost performance, your purchases get more aggressive than usual.
For all I know, the rally could end today and it will still be one for the record books. Lots of people weren’t ready for it.
This post is dedicated to the guys and gals who were able to adjust, despite what their quant models, economic indicators or magic Roubini email blasts were telling them. The quotes below are real, if paraphrased, and came from a variety of my contacts and friends (love you guys, don’t hate me!).
The Reformed Broker presents:
The Five Stages of Panic Buying!
1. Denial (Late March/ Early April)
“Ha, another Bear Market rally…wait til the foreclosure/ new home sales/ confidence data comes in! Right back to 6500, maybe lower…bagholders”
“Dude, the stress tests are coming out next month. B of A may be done-ski. Sell the May 10 calls, you’ll never have to cover.”
2. Anger (Mid-April)
“What the f@&% do you mean the goddamn banks are cheap based on normalized earnings? They will never ever earn anything again, ever! Idiot!”
“You gotta be kidding me with these retailers running now. RETAILERS? Are you nuts? They’re FINISHED!”
“If one more consumer discretionary name rallies on a less-than-expected loss, I’m gonna kick this Bloomberg down a flight of stairs.”