I do not have a crystal ball. I’ve only been around and doing this for more than 30 years. The market crashed more than a week ago. A stock market crash can be likened unto an earthquake, in that, when the earth quakes any considerable amount on the Richter Scale, there will be aftershocks.
It would appear that the first of the aftershocks may be getting under way, if the stock market Richter Scale is the VIX, then the sensors placed around fault lines that measure the seismic activity might be the market futures contracts on the Dow, 500 and Nasdaq that trade overseas prior to our market open.
As I look in on them this morning, at almost 2 a.m. EST, I see that the pre-openers, those futures trading right now in Asia and Europe, that relate to our exchanges, are off by considerably more than 1%, and closer to 2.
It’s almost as if it were acting according to my script written a little while back. But, it’s really this, and you may have read something just like this before. History doesn’t necessarily repeat itself, as the old saying goes, but it sure does rhyme a lot! And the reason stock market history rhymes so well is because human nature does not change, and it can run from one extreme to another between what most will say are fear and greed. Those terms still see a lot of use, but we’re getting more PC even in the financial services industry, and so, now, we like to say that we see the “risk on,” or the “risk off,” trades are in progress.
Don’t you feel better now that we’ve gotten rid of such pejorative terms as fear and greed? It’s looking to be more of the “risk off” trade coming our way, with futures down that much.
We’re just waiting awhile longer to see of it becomes more of a “RISK OFF!!!” kind of scenario! Remember, when fear of market risk is at its highest, the risk itself, is actually at its very least………
A near 7:00 a.m. EST update: The futures are all down by 2% or more as of 6:42 overseas. The Bear Market talk has escalated, as I knew it would, and many are fearful and taking it to heart… they may be right. If it turns into a rout here soon, I will gladly buy their cast-off, safe-dividend growing shares! Will you?
A near 9:00 a.m. EST update: Futures now off more than 2.5%! O, happy day! My new cash has just made it to our accounts, too!
Here’s to your successful investing!
Harold F Crowell