Sell, sell, sell
I did sell everything. I sold as soon as the market opened. If I had waited I could have done better because the market recovered significantly. It had weakened again by the end of the day but never fell to the levels reached overnight.
So what has happened? The markets were spooked overnight by the Cyprus news. But once they had recovered from the shock, they decided to ignore the news and mostly returned to their previous levels.
So was I wrong to pull out? My reason for pulling out had nothing to do with Cyprus. I had made my decision on Friday based on the volume spike in US stock market trading. I was unlucky that the Cyprus news came out because it pushed down the prices at which I could sell.
My thinking was this:
- big spikes in trade usually signal a change in direction for the market
- the market has had a very strong run upwards and at the very least it is due for a pull back
- I have a decent profit which I can take now or I can leave it in the market and risk losing it
- the odds have shortened significantly and I don't want to the wrong side of those odds
What's a Cypriot urn?
Banks in several Euro area countries are at serious risk of failing because they have lent money to customers who do not have the means to repay. At present there is a promise to depositors to protect a large part of their money if their banks default. What happens if the funds needed to fulfill that promise are inadequate? Oh dear! we never thought of that.
I have bought through an exchange traded fund (code SGBS) which stores its/my gold bars in a vault in Switzerland. The Swiss are not nearly as reliable as they used to be but it should still be harder for the authorities to grab assets which are lodged there.
Only time will tell if my run for cover was necessary but at least my profits are safe for the moment. As I have to keep reminding myself, this is my sole source of income. I have to get it right.