For the past few months, risks of a significant market storm have been building. There have been many, many warning signs. I wanted to take a moment now to reiterate for my readers that price risk for stock and commodity markets today appears to be the highest it has been since the summer of 2008. If you have so far not taken steps to protect your capital on the downside, you may wish to reconsider. Remember how you felt about your portfolio losses in March of 2009. It is quite possible that we may be headed back there.
No one can tell for sure how the future goes from here. All we have is probabilities to assess. But at this point, the probabilities of a damaging market storm are uncomfortably high again. I am not suggesting that anyone panic or abandon well established risk management rules that they have set in place. My concern is with the 95% of the population who has nothing better than hold and hope as a plan. Standing unprotected in the midst of hurricane season is a reckless bet. Those counselling you to do so should be acknowledged as a helpless sales force, not worthy advisors.
Cory’s Chart Corner
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