If You Are Going To Panic, Panic Early.
I was typing this up as a response to a comment in one of the last posts but thought I would move it to the front page. I believe in the motto stated in the title of this post. Panic early. (Update: by early, I mean before everyone else.) You don't want to be left holding assets on a murderous descent. Especially one that may not recover for years.
I wrote last week that if the markets couldn't rally soon, we may see a panic develop. Well, the stock market futures are showing what has the potential to be the largest one day percentage decline since 1987. International markets were routed today down anywhere from 5-9% in nearly every market. That means many stocks were likely down double or triple that amount given how indices are calculated. Now, one day does not a panic make, but we are looking at a very dangerous economic environment.
We've had a handful of panics over the last few hundred years. All of the requirements are in place for one to develop. Sometimes fundamentals surrounding those panics materialize and sometimes they don't. But, in a panic, it doesn't matter. In today's environment, that panic is a result of a rapidly developing reality. A reality we have been writing about for some time. Quite frankly, I believe this panic is warranted unless we see a miraculous change in fundamentals.
The latest potential catastrophe is now building in Russia. And, it appears to be gaining momentum. Let me stick my foot in my mouth and say I would put the potential for a blow up in Russia near the top of a "next" shoe to drop list. If this comes to pass, isn't it ironic that Time magazine just named Putin "Person of the Year"? What does that make Time magazine?
I wrote last week that if the markets couldn't rally soon, we may see a panic develop. Well, the stock market futures are showing what has the potential to be the largest one day percentage decline since 1987. International markets were routed today down anywhere from 5-9% in nearly every market. That means many stocks were likely down double or triple that amount given how indices are calculated. Now, one day does not a panic make, but we are looking at a very dangerous economic environment.
We've had a handful of panics over the last few hundred years. All of the requirements are in place for one to develop. Sometimes fundamentals surrounding those panics materialize and sometimes they don't. But, in a panic, it doesn't matter. In today's environment, that panic is a result of a rapidly developing reality. A reality we have been writing about for some time. Quite frankly, I believe this panic is warranted unless we see a miraculous change in fundamentals.
The latest potential catastrophe is now building in Russia. And, it appears to be gaining momentum. Let me stick my foot in my mouth and say I would put the potential for a blow up in Russia near the top of a "next" shoe to drop list. If this comes to pass, isn't it ironic that Time magazine just named Putin "Person of the Year"? What does that make Time magazine?
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