January 21, 2008

Black Monday or Black Tuesday?

Wow! Today was a bad day to those who are invested in financial markets. 20 years after the 1987 black monday crash, markets crashed again on Monday.

This time the crash started with important losses in asian markets (nikkey dropped about 3%, hang seng 5% ...). Movements like these also occurred last week without such a consequence. But today was different. I believe that technicall signals started this crash. As the main indexes started to enter in the oficial bear market territory (20% bellow previous high) nobody stopped the free fall of ... Our investments value.

From my point of view one of the most interesting detail of this crash is the fact that US markets were closed due to Martin Luther King holiday. This will, in my opinion, be the most important fact. Because US markets didn't fall today, they shall adjust tomorrow. But with everyone knowing that markets will fall, thousands or millions of sell orders will enter in the markets and i can't figure why someone will buy anything. Those investors that wish to buy some stocks will wait that panic start to attract even more sell orders... The few investors with desire to buy are smart, and are few so they will tacit collude to wait for the BIG CRASH OF THIS BLACK TUESDAY 2008.

As i posted in my last message, smart investors should be aware that interesting opportunitties are created in the panic environments. Investors with money to invest, with longer term horizons and risk averse can start looking for pearls in this mess. But don't try to be the first to buy, or to be the one who bought at the lower price of the market. I don't believe in a sharp recovery of the market, so take your time. Even if market recovers 5%, more sells will be sent to the markets and kill any rocket upside of prices.

Off course, all these comments reflect only my opinion and view, and are not any recommendation to buy or sell stocks. I will not accept any responsability for any losses you get by following my view of the markets.

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