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What do you get when you mix Al-Qaida with Wall Street? FEAR!

Every trader knows one of the biggest emotions that can completely ruin a successful portfolio is: fear. After all, most would agree the stock market is just human psychology on display.

Giełda na Wall Street

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With the death of Osama bin Laden this week, it’s good to reflect on where we’ve been and where we are now.

Since bin Laden and Al-Qaida launched the terror attacks of September 11, 2001 it’s been a striking ten years of market history. The market was immediately closed with the events of 9/11. When it reopened six days later, the NASDAQ fell 7 percent to 1579.55 while the S&P 500 lost 5 percent to 1038.77. After going through a big run in 2003-07 and a historic bear market in 2008, both indexes,  trade higher now. More importantly, innovation and global demand for a better quality of life have spurred the growth of new companies and new industries. Reread that last sentence. The human entrepreneurial spirit will never stop thinking of ways to improve quality of life. This leaves me with a feeling of optimism for our future and our ability to make money in the stock market. It’s a trader/investor’s responsibility to find those companies who are successful and profit from investing in them.

The general market has pulled back this week. Both the NASDAQ and the S&P 500 have pulled back 2.5 percent in the four days since bin Laden was killed. Is this the beginning of a more significant decline, or just a minor correction? Only time will tell. For those of us who have learned how to protect ourselves with options, the possibility of a correction or even a Bear Market isn’t so threatening.

The question is: will you be ready for the next bull market? And, more importantly, will you recognize it when it arrives?

Emilu Bailes
OptionsANIMAL Instructor

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