Suffering from motion sickness

Severe turbulence in the market

21 April 2009. I'm going to be sick. All this up and down in the stock market has got me down.

After careful consideration, on Friday last I submitted an order to buy a lot of Matrix Services (MTRX) at $9.00. But Friday was one of those frothy up-days, and I was outbid all day long. When the market opened on Monday, the order executed at what turned out to be the day's high! By close of market, the price had fallen to $8.32, and I was down 8% in a single day.

Playing the market is always a gamble, even in the best of times. If you believe the "random walk" folks, stock prices are as likely to go up as down on any given day. What's different now is the amplitude of the ups and downs. In calmer times, prices may have moved a percent or two; now that's nothing.

The old rule of getting out if a loss exceeds 8% isn't a useful guideline if prices swing up or down 8% in a single day. If I had been following that 8% rule yesterday, I would have bailed out, locking in a loss of 8% on a day trade. As it is, MTRX is up almost 10% today, and for the two days I'm ahead by just less than 2%.

People! Just settle down. Please.