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Tuesday, February 27, 2007

Like Trying to Catch a Falling Knife

You know you're having a bad day when your chewing gum starts to crunch. Ouch. That was a crown. So you drag yourself to the dentist and he engages you in an existential conversation about the course of action. You know that it will be at least three visits and EUR 2000.00, because there is always something else to be done. But you try to book the three appointments and he won't commit, because he wants to do a proposal first. I'd rather go straight to the drill and be done with it.

Especially since when I left the office the world markets were already on their way down and I wanted to see where the US was going. It was off 1% when I left the office. It was off 3% and rapidly dropping to Dow -500 when I finally got home. These are the days I long for.

Not because I am an investing genius ... hardly the case. Because I worked in a bank, my trading was sharply curtailed and I was forced to have so-called "patient money." I'm a lousy long-term investor ... too much ADD to do the homework. I figured now that I am out of the bank I can day trade, but I got distracted by other things. So I do monthly buys of index funds and go about my life.


After looking for so-called Hi-Alpha stocks in what has been a low Beta market for the past couple of years, I decided to buy index funds once a month and work on my golf game and flying. Wouldn't you know that this month's buy took place at the close on Monday.

So I look at this and I think back to the days when I was a broker ... somewhere in the mid-1990s the small investor in the US realized that down days like Tuesday were buying opportunities. This is why we haven't had a 1987-style meltdown since 1987.

Anyway, my client would call me up and ask, "Is this a good time to buy?" Boy was that a dangerous question to be avoided at all costs, so I would reply something to the tune of "You know,   Name  ,this is like trying to catch a falling knife. Sure, you can do it, but it might be safer to wait 'til it hits the floor and then pick it up." The guys in Compliance loved me.

So I get home and see this and remember that I dumped a couple thousand into an S&P500 index fund at yesterday's price, and I think "Damn, can I make it back?"

The NASDAQ Q's look like the most likely place ... most volatility, ergo most opportunity. The smart money trades after 3 pm, and I figure if the markets are going to come back and it happens then, then that is where I will place my bet. Sure enough, the markets hit bottom somewhere around 3:20 pm Eastern Time (US), which is where I pick up a boat load of Q's.

For a while things trend up and my position is in the green, but somewhere around 3:45 the markets trend down and I start to wonder if the small investors who used to buy on dips might have had a change of heart. Who knows? I finish the day a little in the red and no longer feeling bad about it.

What I do know is that we are going into another down day in Asia and I didn't go flat. And I don't mind, because for the first time in a long time, win or lose, this is actually fun again. Especially when the guy on Bloomberg TV literally says, "This is all the fault of China ... shame on you guys in Shanghai!" What a hoot!

2 Comments:

Anonymous Maribeth said...

Well, Hubby is starting to tell me that it's time to get a job now that his retirement is in the toilet! LOL We can hope for recovery soon, but remember, after all the rises recently, it was time for a correction. Ouch!

1:00 AM, February 28, 2007  
Blogger Scott said...

Yeah, but THIS time it's different...

Heh.

8:29 AM, February 28, 2007  

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