Chris Vermeulen sits down with Jim Goddard on HoweStreet to discuss the recent massive panic selling in the stock markets. Other than cash, natural gas and the US Dollar are the only two safe havens at the moment. Foreign investment, for example, will move to the currency they believe in the most and right now that is the US Dollar.
When fear spikes, people being to liquidate every asset they own no matter the price. A ratio of over three on the panic selling indicator indicates fear is taking over. Yesterday we peaked at 31 – an extreme level. While this may be a day trader’s heaven, everyone doing longer-term trading should pretty much sit back and watch things unfold.
Should you hold onto stocks in a downtrend or during the lead-up to a bear market? The short answer is no. Why watch your money disappear just because you want to be in the stock market. Ask yourself this: would you rather miss out on a 4-5% return or save yourself from a 40-60% market correction?
The reality is that if we are entering a bear market it could take between 4-18 years to get back to previous highs. Not many people can wait that long for their accounts to recover. Can you?
TO LEARN MORE ABOUT panic selling – listen to the podcast
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Disclaimer: None of this material is meant to be construed as investment advice. It is for education and entertainment purposes only. The video is accurate as of the posting date but may not be accurate in the future.