Thursday, June 08, 2006
(1:06 PM) | Anonymous:
Permanent Possibility
I know that most of the readers and participants around here probably aren't all that keyed in to the daily goings-on in the markets. These days, that's a nice state to be in: stocks have taken a major beating over the last few weeks, and today has been particularly bloody. Since May we've seen sell-ofs sparked by discrete events or sector-specific hiccups, but today everything is down, and in a big way: oil, emerging markets, blue chips, biotech, semis, small caps, everything. Japan is off 3%, Europe 2%; Brazil's Bovespa is down over 4% over the last 48 hours.Impending global financial collapse? Hardly. A good test for those with weak stomachs is what it is. And the real lesson, which I myself forget half the time, is that profits can be made from any major movement.
Yesterday, for example, I bought some VIX call options (the VIX is an index that tracks market volatility) - basically just an educated guess that things would be tumultuous over the next month. At the moment, those calls are up 67%, which offsets my losses elsewhere more than three times over.
So don't ever let your broker or financial advisor or smartass cousin give the excuse of "rough spots in the market" for bad performance.
