Falling Knives, Twirling Machetes
How do you catch a falling knife (plummeting stocks)? With very thick gloves, assuming you’re so inclined.
What’s happening on Wall Street now resembles something more akin to a twirling machete (not graphic enough? the cover of the current Barron’s features a chain saw). The intra-day swings regularly exceed hundreds of points, and whole market sectors — like energy stocks — are alternately rocketing and plunging daily (if not hourly). Of course, the overall trend is down, big-time.
Unless you have access to full body armor (deep capital reserves, ala Warren Buffett), the natural, self-protective impulse is to get as far away from the machete (er, knife) as possible.
That, plus margin calls on hedge funds, appears to be driving much of the action in world equity markets now . . .