Markets getting slammed – how to trade in a downturn

The equity markets have been getting slammed (down about 3% currently) and bond yields have correspondingly dived as people search for safety. Most notably, this is the the second spike in volatility in the year – the first one was in March (which was caused by the Japanese earthquake).

When the bottom is in will be when the least number of people think so, but the tone of the markets at present are quite panicky – even the commodity markets are dropping in price. My guess is that this will occur when volatility reaches around 30-35.

Suffice to say when prices drop, equities become more attractive. The trade that makes money is moving from low risk to high risk when others are running away from high risk. Risk is being discarded quite actively.

1 Comment
Inline Feedbacks
View all comments

I’ve got a few stink bids in now on some companies I don’t feel the need to do more research on in case tomorrow is bad again, and then on the weekend I’ll be looking through what got smooshed the most for Monday’s orders!