A smile is just a frown turned upside down

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I’m a conservative investor, not a trader, but I’ve watched the market enough to witness ups and downs over the decades. As a dispassionate observer, I’ve witnessed run-ups and sell-offs and considered the psychological underpinnings of them. On mornings like this morning (it’s 10:30 a.m. EDT and the DJIA is off 407 points), I want to believe it’s a final flush of fear out of the system — something called a “capitulation” by market pundits. (The other possibilities are, it’s a crash (let’s hope not) or a correction (we won’t know for months). Again, I’m no investor — professional or amateur — but if I were, I wouldn’t be jumping off a ledge, I’d be preparing to jump into some incredible opportunities any moment now.

But hey, what else would you expect from someone who wears rose-colored glasses?

Idea: Again, the market’s down 407 at 10:30. Let’s meet back here in a month and reflect on what happened.

Later: “People are scared out of their PJs.”

It’s now 3:02 PM EDT and, as this MarketBeat column on WSJ.com quotes an options strategist, “People are scared out of their PJs.”

The market has been down over 700 points and is currently off 600.

Yes, people are scared out of their PJs.

Who can blame them? This is a scary day. Watching the DJIA is one thing, but we’re now in an era when individual investors can, via the Internet, view the value of their IRA drop in real-time. And with a couple of button clicks, they can get out of the market.

I’m guessing they’ve been heading for the doors all day long.

This should be a time when the Institutions step in and the pros start mopping up. However, they seem gun-shy as well. Here’s a quote from Steven Goldman, market strategist at Weeden:

“Normally when we get down to these levels, you think we’re close to the rally…On the other hand, there are very few parallels one can look for. It’s not to say we’re not due for a rally here — the market has dropped 10% since 2 p.m. on Friday — but so many things are falling off in so many different ways, and the question for investors is, is this time different from other times?”

As for me, when I hear a market analyst sound that stupid, I figure it’s time to start buying.

So I have.

Note for the archive: Today’s DJIA closed at 9955.50, down 369.88 (-3.58%). At one point, the Dow was down 797.20 points.