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Two steps forward, one step back

Friday, May 14, 2010 posted by cversace

A week ago, I along with the vast majority of investors were staring down one of the worst trading days in recent history. For those not familiar with what I am describing, on May 5 the three major stock indexes - the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite - were down several percentage points before free-falling for 30 minutes to down more than 6 percent for the S&P 500 and nearly 7 percent for the Nasdaq.

As quickly as it happened, those indexes whipsawed back to close the day being down “only” 3.2 percent and 3.5 percent, respectively. This left many scratching their collective heads as to how this happened, how could it happen again and of how can it be prevented from happening again. Concerns over Greece and more caused the markets to contract another 1.5 percent to 2 percent last Friday.

In hindsight, which is of course 20/20 as they say, last weeks column that discussed how volatility can bring opportunity for prepared investors was rather timely.



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