It isn't *that* bad. I bet it would be pretty V-shaped...might not even touch 19,000 but for a machine trading microsecond.
Just climb in the attic, dust off the DOW 20,000 hat you stored under grandma's knit blanket that smells too much like moth balls to use, and set aside a bit of cash to buy.
Why do you think that? This is a pricking of an obvious bubble, which to be honest I thought had another year until it popped. Should have paid far more heed when you bought the puts, your economic sense and timing are excellent. Thank goodness my valuation already had my holdings at my minimum 25% but I sure wish I held 1% puts instead of calls!
In order to keep the economy going in good times the Central Banks have held interest rates to the lowest levels in the history of mankind, in an effort to avoid any sustained economic slowdown. The result is the highest corporate debt load in the history of the United States as measured against GDP, which if you are to believe the bond market, is about to decline.
I took the orderly speed of the decline to indicate there is not a large amount of funds available on the bid curve of most stocks to take the small amount of sales, as you indicated that was not panic selling. As a point the TRIN never got above 1 on any day despite the fastest decline from a stock market top in the history of investing. World record low interest rates and world record declines without any panic is not the type of market I like.
Central banks have spent the last 10 years driving the finances low in order to stimulate demand, but this is a shock that is suppressing demand and is going to put pressure on many marginal companies, which could have a cascading effect. TESLA going parabolic is I think the definitive marker of the top of this market. The FED was already having trouble keeping the party going with last years liquidity squeeze in September. This inflection will hurt far worse than that so I think it will be at least an equal 18 months to 2 years in order for the pain to be cleared out, now that the pain has begun.
But if you feel there will be a V recovery I would like to understand why that would be, in a environment of reduction of physical demand of goods. Oil has already been presaging this move.
Small example, there are literally thousand more, the airlines are all going to take a big financial hit on air travel, resulting in deferred capital and cancelled aircraft orders. Boeing is already borrowing to pay it's dividend, an incredibly stupid decision, airplane cancellations will drastically reduce it's orders and result in a multitude of smaller supplier companies, which have debt financed themselves in the Boeing boom also cutting back. I do not see this issue as a V bounce back but a 18 months to 3 years wait to return to previous production levels.
I am also expect precious metals to decline as Central banks, which have been buying record amounts of gold, will probably need to sell in order to shore up their financial deficits, especially China which has been the largest purchaser of gold over the last 10 years, in anticipation of a world move to SDR's.
But only time will tell.......
But that was also play money.
