This market just keeps getting messier and messier. Just when you think it's safe to look at your portfolio again … kaboom! ... another 5% wiped out.
You should definitely not look at your portfolio during the last hour of trading. Is it just me or does the last hour of trading always see the market nosedive, taking my portfolio down with it?
The past few weeks have felt like a lifetime. Maybe that's because if your portfolio is anything like mine, you've probably seen a decent part of your lifetime savings disintegrate before your very eyes.
And even worse, there seems no end in sight to this selling. Everywhere you look, bad news abounds. Let me count the ways...
OMG, STOP NOW!!!
- Hedge fund selling is killing this market. Many of them are selling indiscriminately to meet margin and redemption calls. Kill all hedge funds NOW!!!
- Mutual fund redemptions are killing this market. Stop redeeming, NOW!!!
- Commodity stocks are being killed as Chinese growth is set to slow and commodity prices are plunging faster than you can say 'urbanization'. Start making steel again NOW!!!
- We're headed for a global recession. Stop receding, NOW!!!
- Unemployment is on the rise. Stop pink slips, NOW!!!
- House prices are still on the wane. Stop foreclosures, NOW!!!
I could go on, and on, and on, all the way down to the dead-end of Bad News Street.
But there is at least one piece of good news: In some places across the US, gasoline is now selling for less than $2 a gallon. That's good if you can still afford to drive a car, but bad if you own shares in oil companies like ExxonMobil (NYSE: XOM ) , BP (NYSE: BP ) , and Chevron (NYSE: CVX ) , to name just a few.
And then there's the global credit crisis, massive currency swings, countries like Iceland, Ukraine and Hungary in all sorts of trouble, and global stock markets getting hammered, lead by the Japanese market trading at a 26-year-low.
No Place To Hide
Next, I'll be sounding like Jim Cramer: There are plenty of reasons to panic, NOW!!!
The plain truth of the matter is that there is no hiding in this market. Panic still reigns supreme, and fear abounds. Many of the share price falls, many of the currency movements, and many of the commodity price movements don't make any rational sense.
But, as you've probably worked out by now, rational doesn't matter in this market. On the one hand we've got speculators and traders trying to make a buck, resulting in prices swinging wildly, and in this market, that means they are swinging mostly down.
And on the other hand, there are ordinary investors like you and I who look at the falling prices and wonder what the hell is going on with the company. Some are jumping to the conclusion that because the share price is falling, there must be something wrong with the company, and therefore selling before the share price gets to zero.
Having a laugh
Take the oil price for example. The market is trying to tell me that oil was fairly valued in July at $147 a barrel, and that also it's fairly valued today, just three months later, at around $60 a barrel.
With apologies to Ricky Gervais, the market's having a laugh. Both prices can't be right. But that's how markets work, in the short-term. The oil price was driven to $147 by greed and by blind faith. For all I know, it may be pushed down to $50 by greed and the fear of the mother of all recessions.
Whichever way you look at it, the constant negative news and the unrelenting falling stock market makes for a stressful time. If you are retired or nearing retirement, it could affect your standard of living for years to come. There are plenty of reasons to worry, NOW!!!
My advice is to stop worrying, NOW!!!
"Worry is like a rocking chair: It gives you something to do but it doesn't get you anywhere." -- Anonymous
"There is a great difference between worry and concern. A worried person sees a problem, and a concerned person solves a problem." -- Harold Stephens
So what is the problem?
It may be something as simple as "I hate watching my stocks go down day after day." The solution is simple: Stop looking at them. Or the problem may be that you feel uncomfortable having too much exposure to the banking sector. The solution? Sell some of them. Simple.
Everything looks cheap
But that may cause another problem. What if you think bank stocks are too cheap to sell, or you are afraid you'll sell out on the day the market soars ahead? You simply sell one stock and recycle the proceeds into another better and/or cheaper stock. Everything looks cheap at the moment, with even former darlings like Microsoft (Nasdaq: MSFT ) , Intel (Nasdaq: INTC ) , and Pfizer (NYSE: PFE ) trading at price to earnings ratios (P/E) of 12 or less. Simple.
Stop worrying. It doesn't do you any good, and anyway, you can't change the past. There will be better times ahead, and this phase will pass. In the meantime, stop stressing out, NOW!!!