Hi all,
Now I'm fairly new to this investing/trading game and this is the first correction I've encounted and I'd just like to make a few observations (from a novices point of view).
On the morning when the market dropped sharply there were a lot of posters panicking and complaining about how much they had lost (on a relatively small drop), this to me shows that alot of people were very poorly prepared for a pullback/correction. This indicates (as more experienced people have already stated) that people have fallen into a false sense of security with the strong bullmarket over the last few years and have got very poor risk management procedures in place and expect the market to just keep going up & up & up. This I think is very dangerous.
The other thing I noticed was that it didn't take long for posters to start rubbing their hands together saying look at all the bargins and to go on spending sprees, imo without due dilligence (ie without serious consideration that this could be just the start of a decent correction), but what amazed me about this is that a drop of around 3-5% is hardly a bargin as it really is only a slight discount, and it seems as alot of these "bargins" have seemed to have dropped further. Imo if people are viewing a stock as cheap after a drop of 3% or so, even before the drop they must think it is still good value otherwise they are trading on very tight margins.
A lot have people have made a lot of money in the current bullmarket but when it does eventually end (whether this is now or sometime in the future I don't know - imo this current situation is just a correction and it will eventually resume its upward trend) I think a lot of people will lose a packet as they will be -
a) poorly prepared and have poor risk management
b) they will chase the market down thinking they are getting a bargin
These are just my very simple (compared to the more experienced posters, who I might add are a lot smarter and have a much better understanding of the market than me.) observations on the current situation and is only my opinion.
Good luck to all