We’ve seen some dramatic movements in stock prices over the last week as the worries about Europe seemed to overcome common sense. Greece was in a position that certainly wasn’t desirable, but since it is now part of the European Union and since a default by Greece would certainly be catastrophic for that union, it was not really a possibility.
Of course, even things that aren’t real possibilities can happen and after we saw the financial meltdown caused by the impossible collapse of housing it is easy to make people fearful. It also doesn’t matter if you know better if you see stock prices plummet. It was clear that the only logical option was to get out of positions before you lost too much.
There is of course a big advantage to being a big trader. When the European Union announced its plans to create a fund to cover the debts of the troubled countries, it was non-business hours in the US. Hedge funds and others are able to trade at all hours. The rest of us don’t generally have this privilege and by the time we could trade the price movements had mostly happened.
Imagine the people who got scared out of the Market on Friday, only to see the prices jump so much on Monday. They would have been unable to do anything except wonder about the unfairness of it all.
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