Tuesday, September 16, 2014 09:27pm
North Adams, MA now: 50 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
SIGN IN | REGISTER NOW   

Home About Archives RSS Feed
Independent Investor: Fear and Loathing on Wall Street
By: Bill Schmick On: 02:00PM / Thursday August 04, 2011
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

It has been over a year since investors experienced the kind of sell-off that has beset the global stock markets this week. As of Thursday, most indexes have lost 10 percent or more. The jury is split on whether we are at the bottom or have more to go.

Most of the losses have occurred quickly, in around 8-9 days, which although painful, could be a blessing in disguise. Sharp, short corrections, in my opinion, are much better than corrections that drag on for months losing a little each day.

Of course, these large declines often trigger strong emotional reactions among investors but decisions based on panic rarely prove to be the right ones in hindsight. So I thought I would provide a little perspective on why the markets are selling off and whether or not you want to join the ranks of sellers.

Over the last few months, the macroeconomic data began to weaken. At first, economists explained that it was caused by bad weather, then the Japan earthquake, but as the numbers continued to come in at a less-than-expected rates investors grew increasingly nervous. Then last week, while all eyes were focused on the debt ceiling crisis, the Commerce Department announced that second quarter GDP came up short — 1.3 percent versus 1.7 percent expected. Even worse, the first quarter was revised downward to just 0.04 percent, a shockingly dismal performance.

That number, combined with an unemployment rate above 9 percent, plus continued uncertainty within the poorer countries of the EU, was enough to tip the scales. The trading range that the markets have been locked in since the end of April was finally resolved to the downside. Since then, we have broken several technical supports and are hovering just above a big one at 1,225 on the S&P 500 Index. If it breaks down and through this level, the chances of additional losses are quite high.

Sounds like doomsday, doesn't it? Well, the same thing happened last year for the same reasons. The economy was slowing, unemployment rising, Europe was in trouble and the markets dropped 16 percent from April 2010 through August. It was then that the Federal Reserve Bank announced the possibility of QE II. The markets reversed, exploded upward and investors never looked back.

Since March 2009 we have had seven such "dips." Each pullback was considered a buying opportunity and those investors that did so have been mightily rewarded. No one knows if this will be No. 8 or if we are going to continue lower. At some level, stock prices will become just too cheap for value buyers to remain on the sidelines. Some say we are at that level now.   

My advice is to decide how much you are willing to lose and when you reach that limit sell and move to the sidelines. For some investors that can mean 5 percent (you should already be out), others will accept 10 percent, while some might be willing to sustain even more. Once your limit is reached don't hesitate. Be prepared emotionally for the possibility that the markets could turn around a day after you sell out. Accept that if it happens, and don't beat yourself up for not staying the course.

For those of you who have bond investments, keep them since bonds and gold are benefiting from the stock selloff.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net . Visit www.afewdollarsmore.com for more of Bill's insights.



Tags: selloff, corrections      
News Headlines
North Adams Cab Company Plans to Relocate
Pro Hockey Team to Hold Reception, Waiting on State's Blessing
North Adams School Project on Track, Under Budget
Developer Details Plans for Former Adams Mill
Pittsfield Historical Commission Invites Input on St. Mary's Demolition
Pittsfield Prepping For New School Costs Estimates
Williams Senior Harrier Wins National Honor
Williamstown's Friendship Club Raises Funds for Outings
Williams College Football Looks to Bounce Back
MCLA, Williams to Partner with North Adams Schools on Science
Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (144)
Independent Investor (196)
Archives:
September 2014 (3)
September 2013 (3)
August 2014 (7)
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (6)
February 2014 (6)
January 2014 (7)
December 2013 (8)
November 2013 (7)
October 2013 (6)
Tags:
Markets Interest Rates Federal Reserve Taxes Currency Rally Fiscal Cliff Stocks Commodities Metals Jobs Deficit Oil Energy Selloff Congress Debt Ceiling Crisis Retirement Pullback Europe Stock Market Fed Bailout Election Economy Banks Recession Europe Japan Stimulus Greece Euro Housing Debt
Popular Entries:
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Don't Fight the Fed
The Independent Investor: Does Cash Mean Currencies?
@theMarket: QE II Supports the Markets
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
@theMarket: Waiting on the Fed
The Independent Investor: The United States of Scotland?
The Independent Investor: Europe Follows the U.S. lead
@theMarket: What's Up With Bonds?
The Independent Investor: Baby Boomers and Retirement
@theMarket: Labor on Their Mind
The Independent Investor: Financing ISIS
@theMarket: Geopolitical Risk Trumps Economic Growth
The Independent Investor: Beware the Russian Bear
The Independent Investor: Why Some Corporations Are Leaving America


View All
Volleyball: Lee vs Mount...
Lee 3, Mount Greylock 0, The visiting Wildcats won 25-23,...
Soccer: Mount Greylock vs...
Eric Hirsch scored twice and set up two goals to lead the...
Josh Billings RunAground 2014
The team from Pittsfield's Allen Heights Veterinary won the...
Football: Amherst vs Williams
Football: Amherst vs Williams in a scrimmage on Saturday...
Girls Soccer: Drury vs...
Taconic girls soccer team took a 3-2 win over Drury on...
Football: Wahconah vs...
The Wahconah Warriors tamed the Chicopee Colts 44-6 at home...
Football: Taconic vs...
The Taconic Braves ran over the Cathedral Panthers 20-8 at...
Youth Center Chair Reception...
Inspired seating was on display Saturday night in the...
Volleyball: Mount Greylock vs...
Mount Greylock bested Wahconah 3-2 on Wednesday night at...
Northern Berkshire Food Fest...
Hundreds flocked to Main Street on Sunday for the annual...
Williamstown Fun Run 2014
About 100 participants competed in the 5-kilometer and...
Soccer: Pittsfield vs Mt...
Friday night girl's soccer PHS wins over Mount Greylock...
Soccer: St. Joe s vs McCann...
McCann Tech defeated St. Joseph, 5-2, Wednesday afternoon...
Boys and Girls Cross Country
Lenox's girls went 3-0 on the afternoon, beating Hoosac,...
Soccer: Renaissance vs McCann
The McCann Tech girls soccer team lost to Renaissance, 2-1,...
Berkshire Trendsetter Awards...
The presenting of the fourth annual Berkshire Trendsetter...
Volleyball: Lee vs Mount...
Lee 3, Mount Greylock 0, The visiting Wildcats won 25-23,...
Soccer: Mount Greylock vs...
Eric Hirsch scored twice and set up two goals to lead the...
Josh Billings RunAground 2014
The team from Pittsfield's Allen Heights Veterinary won the...
Football: Amherst vs Williams
Football: Amherst vs Williams in a scrimmage on Saturday...
Girls Soccer: Drury vs...
Taconic girls soccer team took a 3-2 win over Drury on...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings
Advertise | Recommend This Page | Help Contact Us | Privacy Policy| User Agreement
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2000 Boxcar Media LLC - All rights reserved