Today we have a mild panic in action.
I have no idea why it started Friday. It just did.
I have been buying $XIV since Friday…it’s messy. It is a ‘juiced’ up way to get long the market and anything can go wrong short-term.
Here is what it looks like recently with my awesome ChartIQ doodle :
I don’t like individual stocks much in a meltdown because I don’t want to pick the one pig in the barn on fire. I am too old for 80 screens showing me 300 stocks dancing around, and the marketing departments of all these ETF hucksters have created some cool products to trade in market meltdowns.
I build my gameplan the night before, narrow things down to 5-10 proxy tickers and use my iphone and my one screen desktop. It really works well enough for 99 percent of investors and me of course. Sanity over sexy!
I chose this title today because in market plunges, I get a thousand plus emails and questions about what to do. The questions are ALWAYS about stocks and markets I don’t have a position in and never talk about. I talk about what I am doing or thinking, not what others should do and think. This title is my general response along with …’ask the person who told you to buy it in the first place’.
The major concern I have with ROBO advisors is the inevitable corrections. It’s nice to have someone to yell at and talk to the one or two times a year you need one. With social networks, ROBO advising is on the rise. I have a Wealthfront account myself for some IRA and 401k money, but I never check it. It’s on ‘set and forget‘. Tomorrow I will ‘add and adjust‘. In fact, I think that should be the marketing tagline for ROBO advisors. People need to be trained to add money when the sea of red persists for a week or so and be alerted that while others are panicking, one should consider adding and adjusting…and we are here to talk you through it.
Panics are good because they force people to rethink. It’s a forced time to garden. Those that do it just these few times a year can really juice their long term returns.
That’s my word of the week in fact…Garden!
PS – Serenity Now!
It is noteworthy that people are supposedly “panicking” with Dow down only 6% from an all time high. This is a textbook echo bubble and an “all star game” of market manias. The two market peaks I think this most reflects are 1873 (the echo bubble in rail roads is not dissimilar to what we are seeing in tech vis a vis now and 1999/2000) and 1937 (the peak following the depression low and amidst a currency war). There is likely a good dash of 1987 as well given the disastrous market structure issues present which could manifest like portfolio insurance did in 87. The 1937 peak unfolded with little to none of the typical market warnings like months of breadth deterioration etc. Echo bubbles result when people lived through a similar primary bubble in the same asset class and then knowingly participate a 2nd time-typically 2 to 3 economic cycles after the 1st. People are “true believers” in the first bubble, then cynical participants in the second thinking they will be the smart one that is able to get out in time. Inevitably, people not name Mark Cuban typically get decimated in both. The unwind from an echo bubble peak is typically rapid as people are already looking for their chair for when the music stops – since they know they are playing a game.