A week ago Friday, the title was about a yo-yo stock market. Here I am again, a week later, with the same feeling. On Thursday it was a dizzying 10% from low to high in one day. That is the typical stock market average annual return a few hours! Those trading the newish 3x leverage funds saw 25% to 35% moves intraday.
Readers know that fast moving markets are not my friend. I don't sit in front of the trading screen all day. I use mental stop losses. That combination can be deadly given the volatility.
Barrons reports that margin calls have become much more common, at all brokers. Small fish, big fish alike are being churned and being put into the fishing nets in record numbers. Quite a few are losing all the money in their accounts and will never be back to the stock market.
Many moons ago, when I started in the stock market, I knew a guy who put all his money into a single high flying stock and was so confident that he bought more on margin. As the stock declined, he got a margin call. The man borrowed money from a relative to meet the margin call. The stock continued down and not only did this person lose everything in his brokerage account, he still owed the relative the money borrowed to meet the margin call. Margin calls are not pleasant events.
Again for the average person, diversification, dollar cost averaging into age appropriate asset classes, is the way to go. Those that want to do a little passive management can follow such long term indicators as the 200 day moving average or the Value Line Mean Appreciation Potential. Those that are active, don't need advice, certainly not from me.
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