Market sentiment...scary as Halloween!

Sunday, 1st November 2009 16:49 - by Boredmum

Okay, hands up who was scared on Wednesday and Thursday of last week? It wasn’t even Halloween and I was scared. The announcement that Britain hadn’t pulled itself out of the Recession was enough for a sea of red across portfolios. I’m sure not for everyone, but it certainly was for me. Here was I, thinking that Britain was at the forefront in so many areas, only to find that the likes of France, Germany, Japan, Singapore, Hong Kong, Taiwan, New Zealand, Israel, Brazil, Sweden, Portugal, Russia and Slovenia had all managed to pull out of Recession…but not us. Well, of course the market didn’t like it and my theory of holding well-placed companies went out the window as no-one was spared (at least not in my portfolio and not in the FTSE). For a day I stared at my screen, that all-too-familiar feeling of last year came back as I felt like a rabbit caught in headlights. There was nothing else for it; I was close to 10% down in almost 2 days. That night when the markets were closed I worked out what I would sell (two-thirds of my portfolio) and what I would hold. The next morning came and it started red then something amazing happened, the U.S. was out of recession, and how good was that for market sentiment? The bounce happened. I went from almost 10% down to an overall loss closer to 1%. I know I wasn’t the only nervous one. I heard someone coin a new phrase ‘Hold and hide’. Not a good strategy, but it seemed to work this time. So what has this done? It has made me question if I want to experience such a thing again. It happens so quickly, the warning signs are there but everyone is in debate about when this great ‘Bull run’ is over. When it is, I want to be sitting on cash and 10% would be the maximum that I could face ‘losing’. I know some people had probably gone to cash already. I was ahead of myself in fearing it a few weeks ago to go to quite a bit cash, only to feel the time wasn’t right and go back in again. I still need to fine-tune that timing. How did others feel? Did people react quickly?