Panic Buying/Selling??????

These are not ordinary times; and hence one should not apply ordinary theories to make buy and sell decision.

Theory: One should buy panics.

Which panic – Monday panic or Wednesday panic. What are the chances that it may arrest here? Every day – new problems are coming on the surface and it seems the world is in fire fighting mode. This is the first time in financial markets history that the entire world is feeling the pain.

Investors and traders need to understand the enormity of the problem. This is not a panic because one institution has gone bankrupt. There is crisis of confidence. No one wants to lend to each other, and no one wants to believe that the other party is financially sound to do business with. In such circumstances, one rumour is good enough to make some one go out of business.

We are staring at systemic problem which has shaken up the foundations on which business is done. This is not the time to be brave and become hero. One analyst has described the situation – “Market is exhibiting poison” and buying the current panic is like consuming the poison. I guess a feeling needs to develop among broader community – This market will never go up again. I guess that’s the sort of sentiment one should wait for. Right now, there is still lot of HOPE.

The best way to approach the market = OBSERVE. Let the market find its own feet. The bailouts are not working and it’s clear now that getting excited by Government intervention is recipe for disaster. I guess the theory of “Buy the panic”, as the world knows it, needs to bust.