Calm Amid the Chaotic Crowd

Posted on Jun 30 2015 - 11:01am by Sharpe Trade

On June 29, 2015, markets world-wide began to sink on news of that debt-stricken Greece has introduced controls that include keeping banks shut for much of the week.

We have all seen images plastered across financial media (and other media as well) of long lines Greek Bank Runforming at ATM’s in Greece, as individuals try to withdraw cash so they can pay their expenses and live their day-to-day lives.

I have a few points to make here.

First of all, for anyone in Greece that is stuck in that situation?  I feel for you.  That is nothing to joke about, or to use as an opportunity use as a launching pad for some typical arrogant American ‘witty, critical or snarky’ comment.  I have lived abroad.  Not a vacation.  Not a ‘sabbatical’.  Lived.  As in … a resident.  And at times, it was difficult to obtain cash that was sitting in my banks back home in the United States.  There is nothing funny, or cute about the stress that such a situation can cause.  So for the people in Greece, who may be stuck?  I feel for you.

Second?  It really has not been that big of a move here in United States markets.  Many times, markets will  operate normally within a two standard deviation envelope.  We didn’t even reach two standard deviations on a daily time-frame.  One had look at smaller time-frames (I believe the four hour chart) to see where we did finally reach a two standard deviation move.  So quit freaking out.  It really has not impacted the markets here, in a large way.

Yet.

Third?  I immediately thought of what has to be, one of Josh Brown’s (Of ‘The Reformed Broker’ fame) best work.  If you have not read his piece “Until the Market Rallies“, I suggest you do so.

As I have stated a few times, I am having a rough year.  Hey … it happens to all of us at some point.  So, as I am having a rough year, I went defensive, and zero’d in on my risk.  I gave yesterdays moves in the markets very little thought.

In fact?  My portfolio moved up by near about 20 BPS yesterday.  I had an ‘up’ day.

Why?

I am tactical as of late, with my capital allocations.

I have kept some powder dry.

Because I do focus on risk management, I can be calm, while everyone else is freaking out over a 1.5 standard deviation move …

2 Comments so far. Feel free to join this conversation.

  1. MrAgronomist June 30, 2015 at 11:05 pm - Reply

    It will be interesting to hear your opinion on Puerto Rico financial crisis. I am not sure if any territory has reach this level or State.

  2. Dan Shy July 1, 2015 at 7:41 am - Reply

    I’ve been listening to Kristi Culpeppers thoughts on the matter, as she is more the bond expert. She’s been talking about this for … what … neigh on maybe a year or more …

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