Is anyone actually worried about this? And if so, what are your concerns? - Neil
I try, as best I can, to minimize my emotional responses to Market fluctuations. I believe Benjamin Graham was correct in stating: ‘In the short run, the market is a voting machine but in the long run, it is a weighing machine.’
Unfortunately, the Market often “votes” irrationally, with actions exacerbated by machine trading, algo-trading, the proliferation of all manner of derivatives, “dark pools” and all sorts of big dollar bets placed all over the globe. No one can possibly understand the potential ramifications of even slight perturbations.
Here’s a timely article from Seeking Alpha:
Equity Market Performance Around Crisis Events
With Greece headlines dominating news stories over this past weekend, investors might be on edge regarding future equity market returns on Monday and the coming weeks. A number of headlines this evening are using the words plunge and slide as U.S. futures are down less than 1.5%. Yes, much can change before the U.S. markets open Monday morning, but it is the sensational headline that generates reader clicks and article views.
The chart embedded within the article is informative. It lists a number of “Market Shock Events” and their immediate and longer term impacts. The astute investor will note that the impacts are relatively short-lived. After all, in the long run, the Market is a weighing machine.
I tend to view “crisis” events as buying opportunities. Given that I’m retired and derive all my income from my portfolio, I routinely harvest profits (because it’s better to sell when I can rather than when I must) in order to have some dry powder to deploy in just such situations. But, hey, that’s just me. For young careerists with a steady cash inflow, that’s not a pressing concern.
Having said all that, one over-arching concern remains: We’ve enjoyed a great run up in the US Market. It wouldn’t take much to shift the Market into a “correction” mode. I can’t predict if that will happen now or later, but it will happen. Corrections certainly test every investor’s mettle. Best to stay calm and weigh matters soberly.