Stock prices felt the pain of more sellers today, as equity prices fell around 4%.
Many stock were halted for trading only a few minutes after they opened at 9:30 a.m. then after they did open later in the morning prices zoomed upward with the demand, creating some wide price swings.
For instance, Facebook shares traded at 72 early on and closed at 82. Apple was traded at 92 just after 9:30, and ended the session at 103. Verizon at was on sale at 38, to close at 44. These are big, institutionally traded, household name companies, and a lot of investors are upset that they did not have a chance to buy or sell at these prices. Welcome to the imperfect world of Wall Street.
I came across an interesting statistic on markets from a year ago blog. In the past 10 years, there is a one in 20 chance that stock prices will fall 5% in any given month. If they do, the average decline to the bottom of that cycle is a 12% loss. Stocks have fallen 10% so far in August as measured by the S&P 500 index. So on an average historical basis, the selling might be over. That's just the average (mean) of the fall, however. This 6 year bull market in stock prices we knew would end sometime. We were perhaps surprised that it would take only a week or so to play out (hopefully).
In the six trading days ended today, bonds and gold did help immensely in mitigating stock price declines - the box score: stocks -9%, bonds +2% and Gold +3.4%. Funny but you only hear the doom and gloom on the news reports on stocks (including CNBC, and the talking heads who want to instill fear into the masses).
There's a lot to contemplate the rest of this weekend beyond concerning interest rates, the economic outlook for the third quarter: wait - I'll think of other worried tomorrow.
Stay tuned, stay calm and don't let fear and greed drive your investment actions.
Monday, August 24, 2015
Stocks Fall Again, Reach 10% Loss in August
Posted by Barry Unterbrink at 8/24/2015 11:58:00 PM
Barry Unterbrink is a fee-based Chartered Retirement Planning Counselor and wealth manager. He and his father, Larry Unterbrink, have experience as portfolio managers for institutional pension funds totaling $100 million, Investment Advisory Presidents and financial newsletter publishers. See http://www.stetsonwealthmanagement.com for more information.