Roger Nusbaum submits: Long time readers will know I am a top-down manager as opposed to bottom up. The correction of the last few weeks is an example of why I think assessing the big picture first is more important.
A theme with my writing in the last few weeks has been to raise the possibility that this is the wrong time to own stocks. The market below its 200 DMA signals a problem with demand for equities.
During the run down, how many stocks are down and how many are down? While I don't have the numbers it is a safe bet that very few names have rallied into this. There are obviously some great bottoms up stock pickers out there but success at that task becomes more difficult in an environment like we have had over the last month.
I think success in this down turn has relied more on knowing what sectors to sell or reduce. Obviously I do not have all the answers and I don't believe in extreme bets either but swimming against the current is very difficult.