A White Knuckle Day

May 07, 2010 12:02 AM ET
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Old Trader is a 63 year old private investor, managing a retirement portfolio constructed to a) generate a high current yield, b) preserve capital, and c) increase capital. His methodology involves taking a "top down" macro view to identify favorable trends, and then engage in fundamental analysis at the company level to identify "best of breed" companies that will benefit from those trends. He employs some simple TA to help determine favorable entry and exit points for positions. The ultimate goal is the construction of an "absolute return" portfolio, fully recognizing that such a portfolio will lag in a strong bull market, but will result in much smoother returns, a characteristic he feels is critical for retirement accounts. Founder and moderator of Chicagoland Investors' Group. Monthly Sunday brunch meetings to discuss markets and investing/trading strategies. I can be reached at sangamon_asset@msn.com

While there's little to no doubt that "something" happened, to exascerbate the sell-off on Thursday, the important thing to focus on, in my opinion, is that what's going on in the Eurozone is most definitely pressuring the markets in a most negative fashion.

What some fat fingered trader at some prop desk may, or may not have done, only added some frisson to what had been shaping up as an another fairly seriously down day. I'm of the opinion that those who have been pooh-poohing Greece's problems as a tempest in a teacup, are missing the big picture, so to speak. Just as a carelessly discarded cigarette, or an improperly extinguished campfire can burn down a whole forest, severe problems within a small nation can quickly flare out of control.

From where I'm sitting, it appears that the various actors across the pond, are making the same mistakes that were made here, when the subprime and other credit problems first appeared here. Ignoring the problem when it first appeared; then, when that became increasingly difficult to do, responding with "half-measures".....believeing that anything else might cause a panic. Finally, when "something" causes the situation to spiral out of control, "Defcon 4/Red Alert" is sounded, and there's rush to man the pumps.

To err on the side of caution, seems to be missing from the play book.



Disclosure: No positions

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