In Good Company - 08/05/11

If you are shaken, whether you are an individual investor or a hedge-hogger, you are not alone.

As I wrote earlier this week, confidence is contagious and so is the lack of confidence.

Markets around the world have lost their equilibrium. They have become battlefields of:

1. utter disbelief and loss of confidence in domestic and overseas policy makers (who face multiple non-traditional economic and fiscal challenges) on one side; and

    

2. on the other side, well-anchored (profitable and liquid) large corporations, a more stable banking system, growing (albeit, moderate) economies, reasonable valuations and low investor expectations (and participation).

The quickness of the downside moves in the world's equity markets is historic and is bound to have economic reverberations (in the form of reduced business and consumer confidence and, in all likelihood, in capital spending and personal consumption expenditures).

As well, panic often begets panic-selling; that's a way of saying we don't know where the bottom is when emotion takes over.

If you are shaken, whether you are an individual investor or the most sophisticated hedge-hogger, you are not alone as you have plenty of company.

In such a volatile and emotional setting, your personal investment time frame should be the overriding consideration in your actions. Bargains likely abound for those who have an intermediate-term horizon but are unplayable for those who are seeking short-term trading returns in such a hostile, volatile and unpredictable backdrop.

Everyone has their own view on the proximate causes for the week-long schmeissing of the markets, and I scoured my personal investment contacts for their views well into the late hours of last night. On that score, I found this Barton Biggs Bloomberg interview to be particularly refreshingly candid and accurate in summarizing today's investment opportunities and challenges.