Risk Disclaimer

The positions in this portfolio are incredibly risky and extremely volatile.

No one at Get Irked is a professional financial adviser (or a doctor), so consult with your own financial adviser to see if any of these positions fit your risk profile (and stomach).

Carnival Cruise Lines (CCL)

Between rising interest rates and its competitors having a tough go of it during earnings season, Carnival Cruise Lines (CCL) sold off in sympathy with its sector as investors know they can expect little different when Carnival reports in September. CCL sold off -7.08% this week and sailed in as the Week’s Biggest Loser.

The Unknown Unknowns…

Donald Rumsfeld, Secretary of Defense under both Gerald Ford and George W. Bush, famously spoke of the “unknown unknowns,” referring to unexpected events suddenly occurring.

In the stock market, the “known unknowns” are things like quarterly earnings or jobs reports – we don’t know the outcome in advance but we know they’re coming. The “unknown unknowns” come from unexpected events such as the Fitch Ratings downgrade of U.S. debt from AAA to AA+ this week.

Although not significant enough to be considered a Black Swan Event (think: the pandemic or the Great Financial Crisis of 2008), the Fitch debt downgrade was enough to start a cascade of selling as investors locked in profits in light of what had been an incredible rally from March through July.

Now, August is seasonally volatile, so it’s certainly living up to its reputation already, but will the selling continue? No one knows for sure. Maybe we’ll bounce on Monday.

However, as investors or traders, it’s important to be aware that unknown unknowns can happen at any time. Accordingly, it’s vital to plan in advance for big moves in your positions in either direction so you can be prepared as best you can for those unexpected events that come out of nowhere.