16 August, 2007

Selloff spreads throughout North American Markets yet again

The market sell off, which again began with Asia falling, spread all through North American markets as the Dow midday was down 300 points. The TSX on the Canadian side fell over 400 points as cash is king in the days of this credit-crunch.

Panic is running rampant in the markets now as investors of all sizes pull out of stocks to gain cash. How patient must the patient investor be? No one seems to know just how bad the situation is and no one likes to sit each day looking at more paper losses. However there are 2 irrational things that I think are going on here.

1) The reality of the crisis has to be less devastating than the worst-case rumors that plague the street these days. The markets have heard it all from doomsday default scenarios to out of control interest rate tampering.


2) Great companies are being sold off simply due to fear. But when does the sell off end and the opportunity begin?

As far as time lines go, August and September historically aren't the high times for the market but what is happening here is a full scale exit from a smorgasbord of investors. Why buying has to be put on hold for the time being there are many very attractive entry points to great companies within technology, consumer staples and life necessity sectors.

Patience has always been a virtue but has not been tested to these extents in the market for quite some time.

UPDATE: The end of day comeback was dramatic for the markets as the Dow almost pulled it back even only down 15 points and the TSX in Canada took back over half of its losses from the lows.

A ray of hope? That's too early to tell but bargain hunters were out this afternoon in force.

Patience, not Panic is still the better of the two for investors.

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