Investors woke up this morning to see a large financial firm, MF Global has filed for bankruptcy protection, following some bad investments the firm made in Europe. This is yet another example of how the financial crisis in Europe is wide ranging in its effect. Unemployment numbers out of the Eurozone (member countries of the European Union) were released this morning and showed an uptick and now stand at 10.2%. As I've said many times, I believe investors should still be cautious of Europe, as the Greece bailout proposal is one of the many problems facing the EU; other countries of concern are Portugal, Italy and Spain to name a few.
Here in the U.S., the financials are the biggest losers so far today as investors have concerns financial companies might face similar problems with respect to their exposure to Europe. I for one do not believe this to be the case because our banking system is not as correlated to Europes as most think...it's more of a pyschological correlation than anything else, and as we know the markets usually trade on emotion.
With today being the last day of the month, I wanted to mention an interesting piece of research that I read about this morning. October has been one of the top 10 best performing months over the past 75 years, but the thing that sticks out the most was that in all the other 9 years, those best performing months came during times of stock market declines. So what does this tell me? That despite the jubilation and "feel good" emotion that a lot of investors have looking back at the past month, it is important to remember that stock markets don't just keep going up, they eventually move back down..and as the old saying goes, no one still wants to be at the party when the punch bowl is empty. Take profits and expect the markets to come down a bit in price. I'm personally not going to be buying back any of the stock I sold over the past couple of weeks or any new stocks that I've been watching until we get a little more selling.