Combine one part nervous traders, one part Greek crisis and one part trader error. Stir in one part central bank complacency. Bring to boil. Panic.

That combination produced one of the wildest days ever in financial markets, with the Dow Jones industrial average, at one point, down almost 1,000 points while the euro sank to its lowest level in more than a year. There were substantial declines in emerging markets, whose economies had seemed to be booming, and in developed markets fearful of renewed recessions.

Even though a substantial part of the worst plunge appeared to be linked to a trader error — one $40 stock fell for a time to one penny — prices had fallen around the world even before such mistakes began to happen.

It appears that investors are again growing more hesitant to own assets like stocks and bonds, particularly since many now cost far more than they did only a few months ago. Another sharp retrenchment by investors, consumers and businesses could threaten the current global recovery by choking off financing and new orders for companies.

via High and Low Finance – Frayed Nerves, Trader Errors and Sudden Panic – NYTimes.com.

I really wish I had some spare capital to spare … situations like this are actually good buying opportunities if you prepared to risk further declines in the short-term for gains in the long-term, especially when securities are so obviously oversold. Can you imagine how much money people buying stocks when the market was down 1000 points made by the close?

The key in situations like this is to find companies you believe in and look for the opportunities to buy in times of stress. It worked for me when Citigroup was at 97 cents per share, netting me a nearly 300% profit when I sold those shares in early 2009; and it’s been working for my shares of Morgan Stanley when I doubled my position when the stock was in the $6-9 dollar range in late 2008.

But alas, I’m still trying to get my budget under control after buying the Jeep in March, and don’t have any funds to spare at the moment … but I still think the financials bear watching looking for opportunities to buy. I’m looking at Citigroup (although perhaps options this time around), and think that Zions Bancorporation might be a good buy at 25. But that’s me. Do you due diligence and make up your own minds.