Reuters Markets Editor David Gaffen breaks down the recent market selloff with Clear Alternatives CEO Diane Garnick. Garnick says now is a good time to slowly get back into the market.
Yeah Wall Street -- black -- -- in the middle of a big sell off let's talk about it now on -- Garnett on the markets I'm David -- and here again of course with Diane Garnett have clear alternatives Harriet. Are you doing good. So we've had a big sell off markets down across the board hearing a lot of rumors about hedge fund liquidations. But is that really the case it's -- what's going. We heard about liquidating in theory that needs a likely that this actually lives. What you think how. -- get paid. So. IE. 2%. -- 20% -- -- the opportunity to -- right. From the beginning years in the end of the year how those are measured right. There quarter many times did fairly well -- right and one of the things that's really key here is. From the beginning of the fourth quarter on. The market sold off rather dramatically -- And what that means of hedge fund manager bonuses are at risk so they -- protect their gains they certainly do one of the things because we keep them behavioral perspective is this concept called loss numbers. In other words. People are much more resistance when it comes to losing and they are winning -- losses hurt a lot more. And gains so currency hedge funds now. One of the things that we think is happening is -- -- much more likely to say look. I I wanna lock in the gains that I have thus far. And -- liquidate on often been to cap that an -- and a buyer. It's. They're much more likely to behind but they outline this period. So that they're not opening their year end bonuses. Right now hedge funds of course one part of the market. Our people feel in general right now what they do in his knee jerk reaction a lot of people go to when they see the market selling options. Really -- -- too well it's thinking the first is this past intuitive way of thinking and the second is this well. Analytical way of thinking -- -- factory intuitive ways how many people are responding. To this market right now something like panic is what it sometimes seems. It intuitive way of thinking kind of tricks us a lot of time sure one of the famous test that we can look at his two arrows at two lines and arrows pointing out. -- that has arrows pointing in. In spite of the fact that these two lines are exactly the things. Intuitive sense that's those arrows are pointing out that much longer lines and arrows pointing out like short. If you stop. And spent some time looking at the size of these new line exactly the same one of the things that's key is when you do you. Your goals oriented investing. News that's lower intuitive sense. Now given users slower intuitive sense to bill you're savings goal right investment Cole -- years there's not -- more important intuitive sense for your -- So I am focused on the short term market in years that situation. Stick with it analytical mode of thinking many people. Think about. Markets -- at an optimal and I especially investment -- is long and bright if they're doing it right essentially exactly now right now the arrows are all pointing down. Outfit maybe -- down for one and what should people be doing here as the economy turned on going on let's think about what. Industrial production how quickly businesses are going back up quite a bit right we have oil at eighty dollars at all and the unemployment rate -- people are getting jobs all of these come together to point out that the fundamentals are in place. For US economic growth. So isn't it it's not likely that all three of these come together and the market continues to sell off so bullet point is for me though do you wait to buy until this kind of settles down a little bit it's kind of crazy good good question I think right now is -- good to slowly move back into the market. Right well that's really inside is -- time -- of course it's kind of crazy out there thanks very much. And once again I'm David happened happening are on the markets we'll see you next time.