Am I the only one who is frightened by the news?
It's bad enough that the US automobile industry is facing bankruptcy, but the bad news doesn't end. Last evening Dow component Alcoa (AA) announced it
will reduce output, and cut its global workforce by 13% (approximately 13,500 people will be out of work), in addition to
eliminating contractor positions. Alcoa's capital expenditures for 2009
will be halved.
Even VIX, the CBOE volatility Index, has been falling in recent weeks. True, it's falling from historically high levels and is still substantially higher than it's average over its 20-year history, but it's still falling. That is generally accepted as a sign of complacency, or 'lack of fear' by market participants.
VIX decline or no, I'm afraid. I'm not predicting anything, but I am afraid that the dreaded 'D' word may come to pass. What would that do to the stock market?
I am not going to be positioned for a market disaster. All I want to do is to be certain I don't get slaughtered if everyone else becomes as afraid as I am.
What are your plans?
- Getting long in the face of bad news? Historically that's been the best time to buy.
- Nothing special – just looking for individual trade ideas?
- Buying (costly) puts?
- Something else?