2065 Tracking the Market

Friday, October 10, 2008

I've been watching the charts for the various stock market indices, and I noticed something odd. Every day, they start out low, drop lower through the morning and early afternoon until they hit an extreme low, then they start climbing again! They climb steadily until about 4:30 pm, then they quickly drop halfway again - and that's where they start the same pattern the next day.

Odd pattern?

I think I know what's happening. People who are panicking are selling off. That's what causes the early fall. It's a bit annoying to me that when the news outlets report the activity, they report the low point for the day, without mentioning the rise. That only contributes to more panic.

Then the folks who see this as an opportunity wait until prices fall about as low as they're going to fall, and they start buying. That's what bumps it back up.

A lot of people are going to get very very rich from this. They're buying valuable stock at bargain basement prices.

I hope someone has seen fit to order a temporary halt on day-trading and other fast and short-term trades. Otherwise, you could buy a hunk of equities at 1 pm, and sell at 4 pm, and make a tidy profit, and if a lot of people are doing it, the turnover would contribute to the volatility, and increase the panic. Which, of course, benefits the people profiting.

I gave Piper the order today to jump in, and buy me some indexed and total market mutual fund shares, using the cash in my money market accounts. When the market rebounds (and it eventually will, as understanding of what happened and why grows), I could make an immediate 25% profit, at least.

Piper was bemoaning the fact that he couldn't get in. "I wish I had $200,000 or so available!" I expressed surprise. Of all people, I'd expect HIM to have a spare $200,000 lying around, but he says it's "all tied up" in investments he can't sell right now.

So, if you have some money, buy. If you aren't sure of the health of individual companies, buy indexed or total market mutual fund shares. You can find their phone numbers in any investment magazine. All you have to do is call.
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