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Market sell-off isn’t the end of the world

OK, we know China did what China has done before — it took a big dump. It's not the first time, folks.

China has fallen before, China has rallied before. We've seen swings of 10 percent up and down from China, and we're still here. They have banned short-selling in the past — and they will do it again. They have cut and raised interest rates — and they will do it again. They have bought back shares and applied quantitative easing (QE) methods to the problem — and they will do it again. China will continue to be volatile. These facts we know.


Jon Najarian, Najarian Family Office
Adam Jeffery | CNBC
Jon Najarian, Najarian Family Office

Meanwhile, Europe is still going to apply Super Mario's (ECB Head Mario Draghi's) $1 trillion of QE. The effects have begun to take hold. After the first six months of Draghi's QE, the European Central Bank's plan to flood the financial system with cash by purchasing bonds is making progress. Unemployment in the euro zone is falling. Germany, one of the most powerful economies on earth, showed its manufacturing sector was expanding at a better-than-expected pace. Most analysts still predict profits for companies in the currency bloc will increase 12 percent in 2016, according to a recent survey.

I offer this for those doomsayers who insist that a severe decline in the U.S. and global markets like we're seeing on Monday marks the end of the world: The world isn't ending. The sky isn't falling. But those with naked long, unhedged exposure to the markets are certainly feeling the pain of being overexposed ("Unhedged" happens to be the title of one of "Fast Money" regular Stephen Weiss' books!). Some of you will promise yourselves — yet again — that you will learn to own some hedges, such as VIX futures, VIX call spreads, SPY, or IWM put spreads. But, sadly, most of you will abandon expanding your toolkit and instead will just take the pain whenever the market throws a 3-percent punch in your mouth. That's really not a good plan, but I know a majority of you will go down this route.

On the other hand, and ONLY for those with either knowledge of how to hedge, or have extremely high risk tolerance will agree with me that this is eerily similar to Aug. 24, a date that scores of us on CNBC and in the financial media will likely cite as certain levels of support are breached.

After that August sell-off, I bought beaten-down stocks like XOM, DIS, FB, and AMZN. I will be looking for the beaten-down names again this time.

Stay tuned for Jon's picks and pop yours in the comments section below.

Commentary by "Fast Money" trader Jon Najarian, a professional investor, money manager, media analyst and co-founder of optionMONSTER and tradeMONSTER. He worked as a floor trader for 25 years and before that, he was a linebacker for the Chicago Bears. Follow him on Twitter @optionmonster.