Everybody Overboard?! Not So Fast.

by: Roger Nusbaum

roger nusbaumRoger Nusbaum submits:

High Anxiety 27 02 2007

That's what the market seems to be feeling today. China was down 8.8%, something happened with Dick Cheney, and just about everything is falling.

I expect to lag the market today, and if you do too, it does not really matter -- it is one day. It doesn't really matter if you lag for a year for that matter (lag does not mean miss).

Disruptions like the one that happened (or perhaps still happening) in China are not new and will happen over and over.

I have written several times about looking at your portfolio and knowing what you are vulnerable to; I had an article run yesterday on RealMoney on this exact topic. Once you know your vulnerabilities you can decide whether you should cut back. This is especially relevant for things like emerging markets.

As best as I can tell my lag on the day is around 35 basis points so far. The things that should get hit especially hard are doing just that -- getting hit hard. Regardless of which direction the next 10% is, there is very little that is fundamentally different, nothing really.

I have obviously been expecting a correction for ages; some of the TV folks are saying that this is it. Regardless of what this does or does not become, there will be nothing with this that the market has not seen many, many times before.