Wednesday, October 8, 2008

Mid-day Report: Don't Feel So Bad, Traders are Getting Annihilated Too

I make my living exploiting statistical linkages between stocks on a microscopic level. Because I am so short term and exploit spreads, I make money on 85% of the days that I trade. That being said, these last two days have been complete garbage. Correlations that I have used profitably for months were demolished today. Any semblance of order was replaced by an inexorable pressure to the downside.

The moral of this story is to stay on the sidelines or if you do trade stay as small as possible. That is not to say that there isn't any opportunity in this market. Buy and hold investors are getting amazing prices. But if your strategy is X and the market wants Y then you've got to take a chill pill for awhile and relax. Either get some new strategies or sit back and watch until yours work again. IT IS EXTREMELY EASY TO LOSE EVERYTHING IN A MARKET LIKE THIS. Be careful, and live to buy another day.

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