Market Plunge
Whew! What a week we've been having!
We got a really wild market yesterday. Oil was at $75 from $80 earlier in the week. The Canadian dollar dropped 4 cents to 0.95 and it was just over par a week ago. Gold is now almost $1,200 from trading sideways near $1,100 for last month or so and yesterday the Dow Jones went as down as much as 1,075 points and recovered by closing down 341.90 points.
A lot of people as asking what happened? Why did the Dow drop so much yesterday? Was it the potential bankruptcy and street riots in Greece? No, it's been happening for almost a month now. The market has already factored that in. Was it bad earnings or jobs report? No, it wasn't any worse or better than the previous reports. In fact, some of the reports were better. So what happened?
Well, a CNBC news report that came out late afternoon yesterday said that Dow Jones went down as much as 1,000 yesterday because it was, get this, due to a typo. A typo! Can you believe that? They said a trader typed in a "b" for Billions instead of "m" for millions. The trader sold billions of dollars worth of Procter and Gamble stocks making that stock plunge 37% in one day! Procter and Gamble is one of the most solid and slow moving stocks. There is no way that stock is going to drop 37% in one day unless it's suddenly filing for bankruptcy.
Reports today said, that drop by the Dow Jones caused combined losses of almost a trillion dollars. We're not talking pennies anymore are we?
So what have we learned from this markets over the last year? One, markets are unpredictable. There is no way anyone could have predicted what happened. We can always try to predict how the market will perform. But that's just what it is, a prediction.
I always tell my clients that the best way to make money in the market is to stay invested and do monthly contributions to smooth out the ride. It avoids market timing and if you're lucky, get in while the market is low.
If you were able to get in when the Dow Jones was down 1,075 points and rode it back up to when it closed to 341.90. You didn't actually lose money, you made money; 733.91 points to be exact. But nobody is that lucky and you certainly can't do that in a mutual fund.
Another thing I do for my client is to do a proper risk profile to determine how their investments should be allocated. It helps you sleep better at night knowing that you are not putting your investment at risk unnecessarily.
So keep a level head and stay invested. Even if the market crashes, the sun continues to shine, we still have to go back to work and make a living. The market will do what the market will do and we just have to realize we cannot do anything about it.
We got a really wild market yesterday. Oil was at $75 from $80 earlier in the week. The Canadian dollar dropped 4 cents to 0.95 and it was just over par a week ago. Gold is now almost $1,200 from trading sideways near $1,100 for last month or so and yesterday the Dow Jones went as down as much as 1,075 points and recovered by closing down 341.90 points.
A lot of people as asking what happened? Why did the Dow drop so much yesterday? Was it the potential bankruptcy and street riots in Greece? No, it's been happening for almost a month now. The market has already factored that in. Was it bad earnings or jobs report? No, it wasn't any worse or better than the previous reports. In fact, some of the reports were better. So what happened?
Well, a CNBC news report that came out late afternoon yesterday said that Dow Jones went down as much as 1,000 yesterday because it was, get this, due to a typo. A typo! Can you believe that? They said a trader typed in a "b" for Billions instead of "m" for millions. The trader sold billions of dollars worth of Procter and Gamble stocks making that stock plunge 37% in one day! Procter and Gamble is one of the most solid and slow moving stocks. There is no way that stock is going to drop 37% in one day unless it's suddenly filing for bankruptcy.
Reports today said, that drop by the Dow Jones caused combined losses of almost a trillion dollars. We're not talking pennies anymore are we?
So what have we learned from this markets over the last year? One, markets are unpredictable. There is no way anyone could have predicted what happened. We can always try to predict how the market will perform. But that's just what it is, a prediction.
I always tell my clients that the best way to make money in the market is to stay invested and do monthly contributions to smooth out the ride. It avoids market timing and if you're lucky, get in while the market is low.
If you were able to get in when the Dow Jones was down 1,075 points and rode it back up to when it closed to 341.90. You didn't actually lose money, you made money; 733.91 points to be exact. But nobody is that lucky and you certainly can't do that in a mutual fund.
Another thing I do for my client is to do a proper risk profile to determine how their investments should be allocated. It helps you sleep better at night knowing that you are not putting your investment at risk unnecessarily.
So keep a level head and stay invested. Even if the market crashes, the sun continues to shine, we still have to go back to work and make a living. The market will do what the market will do and we just have to realize we cannot do anything about it.
Comments
Post a Comment