WTF Just Happened: Dow Drops 1,000 Points and Rebounds

If you get sick when your stocks are down, this might be a bad day to look at your portfolio.  According to what I just saw on CNBC, 95% of stocks in the S&P 500 are down today.  For a moment there, my portfolio was down nearly 10%.

It appears that there was a short panic sell-off on almost every stock.  There are fears that the Greek sovereign debt troubles scared a lot of investors.  Some people speculate that Greece will default on its debt and that the Euro will fail as a currency.  As one of the most powerful currencies in the world, a global financial disaster would follow a Euro wide failure sparked by Greece.

However, the market always comes back.  You can learn something from today’s stock charts.  Everyone who went into panic mode and sold near the bottom of the 15 minute market decline of about 600 points, you would have missed the 15 minute gain where most of the losses were erased.

This is still a rough day to be a stock holder, but you would have to kick yourself for selling at the bottom.  That is why investing is a long term endeavor.  You will never succeed if you invest on emotion.  Even when it hurts, stick with it in the long run.  If history is any predictor of the future, you can still make a solid return of over 10% every year in the long run if you don’t buy and sell as the market moves.

Please give your thoughts on the causes and results of this market dive in the comments.