I’m working on a post about SPACs that I thought would be done today …but isn’t. Definitely Monday, though.

This is just to say I think the sharp drop in stocks, particularly NASDAQ, during the last two hours of NY trading yesterday, and the ugly half-hour after the opening today, are significant from a market psychology point of view.

What typically happens in a selloff is that we all hang tough to start with. But downturns are mostly uglier than an optimist like me ever imagines. When I was working, I knew we were getting close to the bottom (at least temporarily) when I would see my hand inch involuntarily toward the phone so I could scream “Sell!” into it.

We’re not near that psychological point at all for me, although these days I no longer bear the burden of the trust of others in my skills to enable them to send their kids to college or retire in comfort (the two biggest reasons for Americans to invest).

Still, the afternoon fall seemed to come out of nowhere. It was also very sharp–which I interpret as market makers seeing a wave of selling coming toward them and tried to blunt its force by swinging their bids down as fast as they could.

Was this a selling climax–meaning investors succumbing to fear and selling everything not nailed down? I don’t think so. Yesterday’s fall was too small and volume wasn’t high enough (less than a quarter of this time last year). It was a tremor, not a March 2020-vintage earthquake. It was a notable event, though.

Two reasons:

–it’s the first real fear I’ve noticed in a long while. That’s good, because it implies that the market is becoming less Panglossian than it has been, and

–it’s a signal to look through our portfolios to see what did worst yesterday, and what has recovered today or not recovered today. So it’s food for thought about each of our holdings and its role in the portfolio.