Sugar-high selloff not scary enough…yet

What’s a couple trillion dollars of market capitalization loss among friends?

The stock market has been tanking for the past week, but not really. The powers that be at CNBC were all excited because they could blast headlines of biggest losses ever on the market, which justified a special after-market program of the dire-sounding, “market in turmoil.” But, again, not really. After all, it’s not about the numbers but the percentages. That said, even with a market on a sugar-high at over 25,000, a 1,100 loss is not small. For one day.

Even the most novice of investors, though not loving the quick and substantial loss of late, can still see the remaining double-digit gains over the past year and remain somewhat subdued. The question is just how calm will they be if the market sells off again tomorrow and their gains drop to single-digits? Or maybe they start to show a little red? We all saw what happened in 2008. The fear drove millions to sell, thus locking in losses they’ll never recoup.

That’s why the markets are so fascinating and absurd at the same time. I mean, really, what changed over the past ten days? There is only one answer: emotion. But that emotion is the same force that has propelled the market to record highs. Yes, today, one can make the argument that the bankruptcy expert’s tax hand-out to the 1% and cash-rich corporations during a calm and prosperous time will explode the deficit, inflation and our country’s overall economy. But that’s going to take at least a year or two and surely that’s not what’s really happening in the stock market this past week.

A few reminders. For the past decade, the economy has been improving. Less and less unemployment, real estate is vibrant, wages stronger but not crippling to employers, inflation in check. Sure seems time to buy the best of the best — Apple, J. P. Morgan, 3M, etc, etc — on the dip.

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