Traders in the gutter, but looking at the stars

Whereas the last crash came suddenly and after five years of continuous growth, traders are wiser and calmer in 2011, thanks to recent experience.

"This is a big opportunity. The [market] is not going to stay down forever. I sort of anticipated it would happen because of [what is going on in] Europe and America," Alan Wootton told The Saturday Age while watching a screen of red figures at the Australian Securities Exchange (ASX) board in the Rialto Tower in Melbourne.

The S&P/ASX 200 dropped 4 per cent yesterday and 7.2 per cent over the week, the worst weekly fall since November 2008. It closed at 4105.6 points, a level not seen since mid-2009.

Mr Wootton said he had been buying shares in companies that usually did well in tough economic conditions, such as food manufacturers Wesfarmers, Warrnambool Cheese and Butter Factory and Select Harvest.

David Shapiro of Blackburn said he thought the decline would continue for some months, noting the crash caused by the subprime mortgage crisis and global financial crisis started in late 2007 but did not hit bottom until March 2009 "I don't think this is the bottom."

Many traders go online to discuss their concerns and ideas.

On Hot Copper's ASX discussion forum, traders were asking for advice on safe havens where to store wealth without it losing value and how to trade in a downturn. Most participants said Australia could not escape the global economy.

"We are a tiny drop in the ocean. When the US sneezes, we get the flu . . . when uncertainty surrounds the EU and some EU countries are looking at possible although unlikely bankruptcy status, then of course that sends shudders through world financial markets," user roygbiv wrote. One user with the name Rogue Trader reminded people that "if you survived the GFC, you can survive this".

"You have to also remember what took place after the GFC," he wrote.

"One of the biggest rallies we have ever seen. All [of] those who sold in panic sat back and watched their stocks soar back to reasonable levels once common sense came back to the market. Worst thing you can do is panic sell on days [like] this."