Tag Archives: Flash Crash

Pavlov’s Dog Capital Markets … Not a Healthy Habit

Capital Markets’ continued fast rebounds are leading to some bad habits.

Do not bite!   – Pardon the pun

Pavlov’s Dog Capital Markets

Just as Pavlov’s dog was trained, capital markets are training many investor’s that any time there is a precipitous drop it is time to buy. It of course works… until it does not!

8-27-15 S&P 500 Two Drop Charts

This is not healthy!

When it doesn’t bounce back, the downside may be even greater as investors trained as Pavlov, may be taking too much risk.

Markets can be vicious money eating animals and this can happen when too many take for granted that “They will always bounce back!”

We do not want fear, but respect for market movements (maybe a little fear) is very necessary.

October of 2014 seems like a distant memory and it looks like September of 2015 may be too. We will not be adding risk based on this assumed bounce back, we are actually monitoring risk even more and adjusting as necessary.

Not being negative, just stating the facts of history!

Have a Great Day!

John A. Kvale CFA, CFP

8222 Douglas Ave # 590
Dallas, TX 75225

International Conflicts, Capital Markets, and Investment Reactions

After working very hard over the weekend on our February review post and video, I decided a conflict update post today may be more timely. As you certainly know, the Russia/Ukraine conflict has heated a bit, as such we wanted to remind ourselves of actions and reactions.

Conflicts and Capital Markets

If history rhymes as it has in the past, capital markets will remain a slave of headlines until a workable resolution is seen. We would expect rumors galore, and a few nervous nellies bailing. We are slightly surprised by the muted reaction so far today, however this could change at any moment.

Investment Reactions

While definitely showing our age, we have experienced 911, several flash crashes, and the awful 07-09 great recession. Making it through without knee jerk reactions and sticking to our diversified allocations offered the best defense and offense.  If opportunity presents itself we will indulge. Otherwise we will stick to our guns and let events unfold as they may.

Have a Great Monday!

John Kvale CFA, CFP

8222 Douglas Ave # 590
Dallas, TX 75225