“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,” – Chuck Prince, CEO of Citibank right before the great financial crisis
On Monday markets dropped their Argentinian dance partner on the floor and it looks like she may need to go to the hospital. The MERVAL Index dropped over 37% in a day!
So equities and bonds are down in Argentina, is anything going up? Yes. Gold has reached an all-time high in Argentinian pesos.
The biggest mistake we see investors making right now is believing that Argentina is an isolated situation. In a global world, everything is connected. Hong Kong, Europe, Argentina. It’s all connected.
The lesson today is don’t think that you can dance without a partner. If you’re buying stocks you need a seller and if you’re selling stocks you need a buyer. Think of other market participants as your partners. Without partners, you don’t have a market and as they were reminded yesterday in Argentina, it takes two to tango.