The official "ASX is tanking!" panic thread

[redFinite]

Why is Selling seen as panic?

This is actually a great point.

Two of the worlds largest economies arent in a great way at the moment. Both seem hell bent on using band aids when we really need some amputation.

I think investors are wary, and rightly so. Especially after the GFC.

We had a big drop, tried to rally but the market is speaking. Today I halved stakes in a few of my holdings to raise 30% cash while I could still break even. I wasnt panicing at all, i gave the rally a chance, it didnt eventuate. It was a purely strategic move to reduce potential losses if we fall further (which i think we will) and to free up some cash for potential bargins in who knows... 6, 8 or 12 months time if or when things settle. If we go up... great, I still own great companies in great financial shape which will recover fast.

Its funny, If you hold you are not proactive, if you sell you are panicing. Sometimes you cant win. All I can do is make a sensible and educated call and back myself if Im wrong well im wrong but thats part of the fun. Very exciting times, this is living, taking risks, backing yourself, loosing, winning, I enjoy it all.

Good luck to all investors

 

[Tysonboss1]

Its funny, If you hold you are not proactive, if you sell you are panicing.

To me being "proactive" means putting together an investment operation that will perform well over time through all market ups and downs, and never have any permanent loss of capital.

to me, where you have used the word "proactive" The word "reactive" would be a better fit, a few people are very good at reacting to markets, but mathamatically the majority will fail.

Reactive investing or trading requires the ability for A to accurately guess what B and C are doing, while B and C are trying to guess what A is doing, Thats not a game I am good at, as I said some are very good at it, some do it by accident, but the majority fail.

 

[Tysonboss1]

In a recession if their is say 1% decline in gdp, It does not mean that everyone and every business becomes 1% poorer.

It probably means that 2% of people will become 50% poorer and the rest will potter along doing ok.

So, Ideally (in my veiw) you want to find those companies that will suffer minimal effects and buy them when the market is offering them at unrealistic discounts, and in the same breath you should want to sell them during a boom when the market is offering unrealistic premiums.

 

[wayneL]

In a recession if their is say 1% decline in gdp, It does not mean that everyone and every business becomes 1% poorer.

It probably means that 2% of people will become 50% poorer and the rest will potter along doing ok.

So, Ideally (in my veiw) you want to find those companies that will suffer minimal effects and buy them when the market is offering them at unrealistic discounts, and in the same breath you should want to sell them during a boom when the market is offering unrealistic premiums.

I'd argue with the numbers i.e I think it would be substantial more than 2% with some some of that number being subtantial less poorer than 50%, but agree with your premise... on the face of it at least.

There may be some non-transparent figures that make the number even larger still, but these will go unreported.

In any case I agree with the premise with a caveat. Confidence is paramount, so even those unaffected may rein in their spending anyway.

 

[Tysonboss1]

Confidence is paramount, so even those unaffected may rein in their spending anyway.

Yes, we saw this during and following the GFC.

Less people would go out to expense restruants, But substituted to things like Dinner and a movie, or entertaining at home.

Mcdonalds actually produced a record profit in the gfc.

 

[WhoToTrust]

Could not one argue that proactive and reactive in terms of trading/investing are the same as both require change?

 

[So_Cynical]

Why is Selling seen as panic?

Because its the panicked that are uncomfortable...excluding system and high discipline traders, pretty much all the sellers have to be uncomfortable with current market conditions/direction to sell.

I would think.

 

[Tysonboss1]

Could not one argue that proactive and reactive in terms of trading/investing are the same as both require change?

Proactive - Acting in advance to deal with an expected difficulty.This behavior is the opposite of taking action only as a reaction to matters as they arise.

Reactive - Behavior that is not internally motivated but manifests in response to a situation or the actions of others.


You can look at it like this,

A person can keep their house orderly and tidy and feel comfortable whenever a visitor drops by on short notice this is a proactive approach.

or,

You can can live like a slob and panic and start running round the house hiding dirt laundry and dishes when you see a car pull up and your mother inlaw step out, this is reactive.

 

[WhoToTrust]

Proactive - Acting in advance to deal with an expected difficulty.

Reactive - Behavior that is not internally motivated but manifests in response to a situation or the actions of others.


You can look at it like this,

A person can keep their house orderly and tidy and feel comfortable whenever a visitor drops by on short notice this is a proactive approach.

or,

You can can live like a slob and panic and start running round the house hiding dirt laundry and dishes when you see a car pull up and your mother inlaw step out, this is reactive.

So person 1 has some stock, they notice that over the last few weeks the stock has fallen, they pro-actively (anticipating the future, in this case they anticipate that the stock will continue to fall ) make a choice to sell the stock.

Person 2 is in the same situation, they anticipate that the stock will also continue to fall, however they anticipate that while they stock will continue to fall, that at some time the stock will rise again. [EDIT] They make a choice not to sell the stock. [EDIT]

So are not both being proactive here?

 

[Struzball]

Person 2 is in the same situation, they anticipate that the stock will also continue to fall, however they anticipate that while they stock will continue to fall, that at some time the stock will rise again.

So are not both being proactive here?

Depends what their goals are.

If person 2's goal is to lose money he is proactively ensuring that will happen

But seriously, I believe Person 2 actually is moreso anticipating the future rise, while disregarding the current fall. Not what I would call a proactive investor. Also this has absolutely nothing to do with anything.

 

[wayneL]

So person 1 has some stock, they notice that over the last few weeks the stock has fallen, they pro-actively (anticipating the future, in this case they anticipate that the stock will continue to fall ) make a choice to sell the stock.

Person 2 is in the same situation, they anticipate that the stock will also continue to fall, however they anticipate that while they stock will continue to fall, that at some time the stock will rise again. [EDIT] They make a choice not to sell the stock. [EDIT]

So are not both being proactive here?

What about person 3?

There are other proactive possibilities

 

[WhoToTrust]

What about person 3?

There are other proactive possibilities

I Never said there wasn't.

 

[wayneL]

I Never said there wasn't.

Oh OK! I was just feeling left out there. :

 

[Julia]

To me being "proactive" means putting together an investment operation that will perform well over time through all market ups and downs, and never have any permanent loss of capital.

That's imo a pretty narrow definition of 'proactive'.

to me, where you have used the word "proactive" The word "reactive" would be a better fit,

Nothing wrong with reacting to altered situations.

Reactive investing or trading requires the ability for A to accurately guess what B and C are doing, while B and C are trying to guess what A is doing,

Aren't you over-complicating it? Why does it have to be more complex than adhering to a strategy of letting profits run, then appropriately reacting to avoid losses when the trend reverses?

Proactive - Acting in advance to deal with an expected difficulty.This behavior is the opposite of taking action only as a reaction to matters as they arise.

Reactive - Behavior that is not internally motivated but manifests in response to a situation or the actions of others.

The above reads like a quote from the dictionary. That's fine, but it's not always a good fit to attempt to attach a broad definition to a specific situation.

You could say - as has already been suggested - that the proactive trader is simply reacting appropriately to a change in the market environment, while the investor who does nothing is being passively inactive.

Honestly, it seems a bit of a silly discussion to me, but perhaps I'm missing something vital.

 

[Boggo]

Mmm 53 posts in this thread today, 2 posts yesterday and 2 posts the day before yesterday...and all that because we failed by what...110 odd points to get level with where we were last week when the ASX actually did have a bit of a tank.

Is the fact that we didn't actually tank the badly today an indication of anything? some market resilience perhaps....i think market bashing threads have something very much in common with Labor bashing threads.

It wouldn't have anything to do with the fact that it is "The official "ASX is tanking!" panic thread" now would it?

It is the topic at hand isn't it.

I was thinking the same thing when I saw the first comment above last night !

Why is Selling seen as panic?

Sounds like having and sticking to a business plan, agree, why panic ?

Because its the panicked that are uncomfortable...excluding system and high discipline traders, pretty much all the sellers have to be uncomfortable with current market conditions/direction to sell.

I would think.

Or they believe in retaining profit and have overcome some of that nonsense that learners call emotion.

So person 1 has some stock, they notice that over the last few weeks the stock has fallen, they pro-actively (anticipating the future, in this case they anticipate that the stock will continue to fall ) make a choice to sell the stock.

Sounds like commonsense to me as opposed to getting emotionally involved and hanging on to stocks because the management are telling them that it is fundamentally sound, ie, it is ok to give back all your profit and go into the red because we said so.

If you are really dependant on others and believe that the tooth fairy exists then you buy some more, this keeps the gap between the falling price and your average buy to the same distance so that makes it all better

This is an alcoholic "just one more drink and then I will give up" mentality, ie, commonsense overruled by emotion.

 

[WhoToTrust]

Oh OK! I was just feeling left out there. :

If you are bored you could always have a look here for a giggle.

 

[tech/a]

Wow such in depth reasoning.

I'd have thought the Europes coming off because of debt concerns so you can't blame investors for selling out ---- let's face it it's not a bullish situation.
THe US is insolvent so investors there are the same --- hardly a panic.
It's not going to turn bullish on a dime.
Investors here realize that both of these economies will effect our own.
Interest rates will soon be cut as will the AUD not long after that so our market will decline--- unfortunately further and longer than many want particularly as many want to see thier retirement fund increase not decrease.

With the fundamentals in place I don't blame any sellers and don't see their actions as reactive panic.
More logical risk management.--- capital protection--- if you have serios funds in the market I don't think now is the time to be a hero.

 

[notting]

The US's solution to its insolvency is that it just writes a little 0 on the end of each number on those little pieces of paper people carry around. It's kind of a way of paying what it owes to the outsiders who are unfairly pegged to it.

Unfortunately, the US may have to combine this by unfunding it's pension funds etc., using it's sitting president to veto the Bush tax cut extension which will be the next 'big deal.'

The recent market panic first set in with DAX and CACS, especially DAX pre-empting it's latest growth-less figure. It wasn't with Uncle Sam and his texta.

The panic continued from there because Euroland has no decent Texta nor much pegged to effect, if it did have one. Yet it tends to remain in lock step with the US as it is, so Sams Texta seems somewhat broad.
Praise the machines for they are programmed to respond to value.

I'm watching for the sign of Euro solvency not US solvency that's my cue.

Limb slicing may cause uncontrollable haemorrhaging, yet current increase in the debt squeeziness is almost as bad.

Oil is coming down nicely to help growth all over the place which is most helpful.

People have probably recognised that, if you were an american fund,
Euroland fund or Pegged fund buying Ausi stocks they are generally still twice the value in US,EU & PEG terms that they were during the height of the GST. Whilst internally they are far cheaper.
Bit of insurance in that interest rate! Cut?
Just hoofing around as it's too cold to be floating in my damn................................ yet.

and I'm on drugs

Monday will be 'interesting times.'

 

[tech/a]

What signs do you want
You don't have to look any further than the PIGS

 

[wayneL]

What signs do you want
You don't have to look any further than the PIGS

I'm waiting for when France and the United Kingdom become a problem.