Sad Guys On Trading Floors^TM.
If you’re looking for a silver lining to this mensis horribilis in the old market saws about retail investors being prone to panic and capitulation, don’t, because they aren’t. Nope, individual investors are adding money to stocks, sayeth those to whom retail investors give their money to invest in stocks. And rock bottom? Yea, it comes not with a frenzy of selling, but with a sad whimper. You won’t even notice it looking at trading volumes. All of which adds up to: This mensis horribilis could just be the beginning of an annus horribilis. Strap in. Glad we could cheer you up after what must have been a delightful commute.
History shows that falling markets tend to hit bottom not with a bang but with a whimper. So if you are trying to time the market by waiting for capitulation, watching out for an orgy of selling is probably the wrong way to recognize it….
If you have a high tolerance for pain, it is fine to “buy on the dips” as falling prices make stocks less overpriced. But, as the behavior of many individual investors has been showing, we are a long way from the quiet despair that has so often been a sign that stocks have finally reached bargain prices.