Stock market “co-variance” means in laymans’ terms that, when something happens, all the stocks in your portfolio move in the same direction. Regardless of an individual companies’ performance, financial position, or future prospects, every stock in the index moves up or down together. As you can see in the list above, the 20 or so stocks in this portfolio ALL went down today.
The types of events that used to move markets like this were due to wars, elections, or changes in policies such as interest rate meetings like the Fed. Now, however, it is often due to the inexorable series of financial crises that we have faced in the US and now in Europe with the Euro crisis. Today the German bond auction had difficulty, and this ricocheted across the ocean into our markets.
To be an investor today you need to keep one eye on the stocks that you select and another eye on the overall factors that are causing the market to rise or fall. Unfortunately, many of these items causing the market to rise or fall are caused by government policies and actions which are impossible to predict in the short run and impact the entire market.
It is frustrating…