Bear View V - Heading for the Exits??
More from Jim Jubak on how the big elephants are crowding to the exits. We too believe this unwind could get much uglier as there are elephants rustling about and trying to squeeze out the exits.
Key Quotes: Trading was halted on the Columbia stock exchange after the market fell more than 10%. Mexico's market tumbled more than 4%, its biggest drop in more than three years.
India's Mumbai stock exchange, one of the markets hardest hit in this sell off, fell another 3.4%. The selling Tuesday started early, as Japan's Nikkei 225 dropped 4.1% to its lowest level since Nov. The markets for gold and other commodity metals went into free fall.
Have the pros panicked?
I'd say yes. In their rush to get out the door first, professional investors -- the folks who borrowed money to buy stocks and bonds in risky markets and then bought derivatives to "insure" against the risk (they hoped) -- have led a sell-off far nastier than any change in economic or financial fundamentals justify.
Selling fast is especially important if you've borrowed money to purchase your stocks, commodities, or options. If the assets fall enough in value, your lenders will step in and force a sale to protect their money.
The huge drop in gold on June 13 had all the earmarks of a forced sale by some big investor or investors as a result of a margin call. Some of the moves in emerging markets in recent days have the same feel. Stocks have entered their weakest period of the year. I don't see any real upside catalyst emerging until the fall.
Key Quotes: Trading was halted on the Columbia stock exchange after the market fell more than 10%. Mexico's market tumbled more than 4%, its biggest drop in more than three years.
India's Mumbai stock exchange, one of the markets hardest hit in this sell off, fell another 3.4%. The selling Tuesday started early, as Japan's Nikkei 225 dropped 4.1% to its lowest level since Nov. The markets for gold and other commodity metals went into free fall.
Have the pros panicked?
I'd say yes. In their rush to get out the door first, professional investors -- the folks who borrowed money to buy stocks and bonds in risky markets and then bought derivatives to "insure" against the risk (they hoped) -- have led a sell-off far nastier than any change in economic or financial fundamentals justify.
Selling fast is especially important if you've borrowed money to purchase your stocks, commodities, or options. If the assets fall enough in value, your lenders will step in and force a sale to protect their money.
The huge drop in gold on June 13 had all the earmarks of a forced sale by some big investor or investors as a result of a margin call. Some of the moves in emerging markets in recent days have the same feel. Stocks have entered their weakest period of the year. I don't see any real upside catalyst emerging until the fall.
Comments