Market Panics – Gold Sought as Safe-Haven
The market panicked today following the unrest in Greece leading to unprecedented losses amongst stock. Procter and Gamble fell 25% within seconds. Similar situation with CenturyTel that reported blowout earnings just yesterday saw a similar nose dive. The market has since come back and speculation of system errors is now rumored in the market.
These levels are not realistic, but investors remain on edge following the lows of 2008 such that simple dips are greatly exaggerated by a factor of 10 as the ripple effect spreads through the market.
The safe haven remains Gold, which is having a nice rally today. Names like Yamana, Barrick, and Goldcorp are up over 4% on the Toronto Stock Exchange. Gold stocks commonly rally during the month of May as volatility increases. Obviously the extent of this rally and increased volatility that we are currently witnessing is something that could have never been anticipated. Yamana and Barrick were highlighted by this site the other day on EquityClock.com and can be accessed via the following links:
The important thing is to not panic. A correction from the highs was expected, but not to this extent this quickly. As reported by this website, defensive plays in Consumer Staples and Health Care are the seasonal strategy. Best bet, until the market settles, hold on to your position in Gold. The most likely scenario is that people will begin to gamble by investing in stocks that have been deflated to significantly low levels. Don’t buy on the way down…buy on the way up. Wait for a defined bottom that the stock maintains for at least a couple of sessions, and the defensive plays will be the strategy to put your portfolio back on firm ground.
Update: It is now rumored that the selloff was spurred by human error at a major firm whereby trades were input incorrectly (billions rather than millions). Don’t believe the panic!
Stocks mentioned in this post: ABX, ABX.TO, AUY, G.to, GG, YRI.TO
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