Yes, current market circumstances prove ennervating; in fact, global markets decline hard as I write this post late-Sunday night -- pointing the way to yet another ugly opening 'rotation' (to borrow a term from the options markets). But in these difficult days, remember the many investing axioms I have shared, and especially this one:
Seek the inflection point, the moment of extreme, obscene weakness. In a (seemingly) perduring (thanks to entropy, nothing truly perdures) down trend; part of that moment will occur as a large gap down at the opening.
While this decline is dissimilar from declines previous in its extraordinary set of circumstances, it also is similar to all other declines predicated on a set of facts that become increasingly familiar:
• The
Mexican debt crisis of 1982, where that country's starvation for liquidity and solvency caused us to pump money, and more money, into the financial system. And thus ended with an explosive bang the 16 year high level consolidation described previously;
• The
SE Asian currency crisis of 1997, when we thought the meltdown of the Thai baht, Malaysian ringgit,
et al would infect the rest of the world, and
• The meltdown of
Long Term Capital and Russia's debt default of 1998, when chaos rocked the global markets.
• And other declines, based on a similar circumstances and equally horrific.
Check the charts for those epochs; perhaps of note is that the worst pain adminstered to the greatest number of people occurred during the summer and early autumn months. (June through September.) Each decline prompted fear that the end days were upon us. Guess what? The markets recovered from each of them. And here we sit to discuss the (de-)merits of this decline. Which all adds (but does not sum), as to why the markets do not frighten me, now or ever.
Dorsey Wright:
"The market will not bail you out of mistakes and we would rather lose opportunity than lose money. Of course during these times, magazines and media try to make it look ten times worse, which doesn't help customers' psyche. During the bottoming process, we always find that new sectors emerge and provide leadership. There is always opportunity. We look for those opportunities to emerge among the rubble by looking for higher bottoms compared to the market. While it seems that everything has been going down over the last couple months, the reality is it hasn't been. Good things occur even, if you look under the surface. Despite another week of extreme volatility and a move to new lows by the broad market averages, there are some positive things occurring underneath the surface. More specifically, as the image below shows, we have seen relative strength emerge in some of the Sub-sectors and Mini-sectors.
