O'Brien: The markets' quiet crash
By Chris O’Brien Mercury News Staff Columnist
SmartStops comment: In our recent Beta test process we received a surprising number of complaints that we were publishing too many exit signals. Our Beta testers were skeptical of our new service and assumed that our methodology might be overly protective of their portfolios. Unfortunately most of them decided that our exits needed to be ignored because they saw nothing alarming in the markets at the time and they were comfortably attuned to a Buy and Hold mentality. How helpful were our exits? Pick any stock and look at where the SmartStops exits were triggered and calculate how much money might have been saved. As you can see SmartStops was not just crying “wolf”. These were very real and very accurate warnings of what was about to happen.
Excerpts from article: The stock markets are tanking. While you were staring slack-jawed at the "Price Reduced!" sign on your neighbors' house, the three major stock market indexes decided to jump off a cliff. Since the start of 2008, the markets' tailspin has analysts reaching for some historic comparisons. And unfortunately, the one they're using is the Great Depression.
Yes, that Great Depression. Hoovervilles. FDR. Got your attention now?
Perhaps the most surprising thing, though, is how little people around here are talking about this swoon. In some ways, it may actually be a healthy sign that we have become a little less obsessed with our stock options and portfolios. Or maybe it's just a sign that following the dot-com bust, many of us shifted our easy money fantasies to the value of our homes, pinning our hopes for a luxurious retirement on the rapid rise in housing prices.
We're still busy grieving the end of that convenient fantasy. But in the meantime, the stock markets have sneaked up and delivered a painful sucker punch while we weren't looking. Just consider some of the historic comparisons being made:
• The Dow Jones industrial average was down for the quarter ending June 30, marking the first time it had experienced three consecutive quarters of declines since 1978.
• The S&P dropped 8.6 percent in June, its worst June since 1930, and its worst month since September 2002.
The hardest hit, of course are those near retirement, who are being forced to recalculate their portfolios and budgets.
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