U.S. stocks in freefall

[WolfpackFan]

^^At 26, I enjoy the drops, too. Probably going to make my final HSA contribution tomorrow.

Also, congrats on a great user name!

Signed,
NC State alum

Nice! Looks like we might have ourselves a decent basketball team this year too.

I have seen in my lifetime a lot of 30 year old's that woooo wee don't give a bleep in the homeless shelters in their 50's. I almost ended up there myself. So now at 60 I wooo wee do give a bleep.

lol were they too index investing? My comment was meant in regards to index investing with a long time horizon, not a general outlook on life.

[wshang]

Freefall? LOL This doesnt even count as a correction. Its ~6.5% drop. Need a 10% drop before its a correction.

You might well get your wish . . . IWN is already down 10% from the top -11.5% (as I write), SPY down 8.2%. I would write something political, but it would only make me chagrined. Perhaps some people are happy about this.

[STC]

Freefall? LOL This doesnt even count as a correction. Its ~6.5% drop. Need a 10% drop before its a correction.

You might well get your wish . . . IWN is already down 10% from the top -11.5% (as I write), SPY down 8.2%. I would write something political, but it would only make me chagrined. Perhaps some people are happy about this.

It just doesn't bother most here. If 2009 did anything, it got people to focus on risk within their AA. Now most, myself included, have a AA they are comfortable with. Im still a long ways from my rebalancing band, so I am just going to stop watching the market for a while. My IPS is what guides me. Not my emotions.

[floydtime]

Perhaps some people are happy about this.

Once upon a time, I would have been ecstatic at the past years' returns, and devastated by the last week's returns, and so on and on and on.

Now, ehh, whatever. It's all a blip, and we'll be fine. Maybe we'll hit 666 again...we'll also hit 1500 again...the sun is out, and it's another beautiful day.

[wshang]

Perhaps some people are happy about this.

Once upon a time, I would have been ecstatic at the past years' returns, and devastated by the last week's returns, and so on and on and on.

Now, ehh, whatever. It's all a blip, and we'll be fine. Maybe we'll hit 666 again...we'll also hit 1500 again...the sun is out, and it's another beautiful day.

Luckily my original quip is vague enough to allow such varied interpretation as not to be censored.

[nisiprius]

OK, made me look. Haven't checked the Dow in several weeks. Can't find my magnifying glass, so let's just sorta look at the big picture without getting bogged down in fine details...



Nope, nothing much going on.

[Browser]

I recently visited my optimist and got fitted with a new prescription. When put on my eyeglasses now things look like this - I'm thinking about asking for a refund.

[BBL]

You know things have been good when this thread gets resurrected during minor fluctuations.

I've lost respect for this thread.

[kenyan]

You know things have been good when this thread gets resurrected during minor fluctuations.

I've lost respect for this thread.

Could just be permabears looking for something to appease their sensibilities.

My portfolio moved from 75/25 to 74.2/25.8 this week. I guess that's what all the fuss is about. I only rebalance when one of my asset classes is 15% (relative) off target, so no action is necessary.

[BBL]

You know things have been good when this thread gets resurrected during minor fluctuations.

I've lost respect for this thread.

Could just be permabears looking for something to appease their sensibilities.

My portfolio moved from 75/25 to 74.2/25.8 this week. I guess that's what all the fuss is about. I only rebalance when one of my asset classes is 15% (relative) off target, so no action is necessary.

Thank you, kenyan. That’s the perspective that’s needed here.

Might I suggest a rule of thumb? ‘If you need a decimal place to determine the shift in your AA then you do not have problem’.

Seems obvious, but...

[Boglenaut]

I recently visited my optimist and got fitted with a new prescription. When put on my eyeglasses now things look like this - I'm thinking about asking for a refund.

I guess that's where one buys rose colored glasses to look through.

[wshang]

My portfolio moved from 75/25 to 74.2/25.8 this week. I guess that's what all the fuss is about. I only rebalance when one of my asset classes is 15% (relative) off target, so no action is necessary.

Thank you, kenyan. That’s the perspective that’s needed here.

Of course when one is in accumulation phase and not value tilted, that is one perspective.
For those who have a value equity tilt, the decline from the top (not this week) is has been greater than 11%, a bit scary for someone in withdrawl phase. Looking at the charts, it is clear to me at least this is and has been a sideways market, and there are ways to make money in that too.
But hey, BH is online group therapy. Keep repeating after me, the mantra: "stay the course, stay the course, stay . . . . ."

[BBL]

My portfolio moved from 75/25 to 74.2/25.8 this week. I guess that's what all the fuss is about. I only rebalance when one of my asset classes is 15% (relative) off target, so no action is necessary.

Thank you, kenyan. That’s the perspective that’s needed here.

Of course when one is in accumulation phase [I am]and not value tilted[I am], that is one perspective.
For those who have a value equity tilt, the decline from the top (not this week) is has been greater than 11%, a bit scary for someone in withdrawl phase. Looking at the charts, it is clear to me at least this is and has been a sideways market, and there are ways to make money in that too.
But hey, BH is online group therapy. Keep repeating after me, the mantra: "stay the course, stay the course, stay . . . . ."

If you are in the withdrawal phase and an 11% equity fluctuation is causing you distress then you probably have too much equity.

If you are in withdrawal and have a 40/60 equity/FI your equity moved the needle roughly 4% while the 60% bonds did what?

That's all I'm getting at here. If 11% [equity] declines are a big deal to someone in the withdrawal phase that really suggests a risk issue to me.

Someday I'll stop doing math in public

[wshang]

Of course when one is in accumulation phase [I am]and not value tilted[I am], that is one perspective.
That's all I'm getting at here. If 11% [equity] declines are a big deal to someone in the withdrawal phase that really suggests a risk issue to me.

Yeah, I knew that part already. We are not in disagreement other than 11% equity declines can be of worry to anyone in withdrawl phase, especially if one takes a long term perspective of history: http://crawlingroad.com/blog/ ("Consider this, how many governments still exist today that existed 100 years ago out of hundreds of countries? By my count, maybe six? U.S., Canada, Britain, New Zealand, Australia, Switzerland? ")
Systemic problems of the economy have not been addressed and personally, I am given human nature and historical precedence, I think in some ways this is somewhat of a blithe way of looking at risk. Maybe that is why for the first time in three decades, I have bought gold.
Maybe I shouldn't be worried about systemic risk, but then again, I'm not Alfred E. Newman.

[kenyan]

I'm an accumulator who is small and value tilted. From 11/06 to 11/15, this is what my tilted funds did:

VSIAX: -7%
VTRIX: -3.7%
VSS: -3.4%
TILCX: -5.1%

Of course, they're all also up a minimum of 8.5% on the year. I guess I'm not seeing the reason to panic. You're right that a retiree might have a different perspective, but said retiree probably shouldn't be 100% domestic small value. Bonds were up.

[BBL]

Of course when one is in accumulation phase [I am]and not value tilted[I am], that is one perspective.
That's all I'm getting at here. If 11% [equity] declines are a big deal to someone in the withdrawal phase that really suggests a risk issue to me.

Yeah, I knew that part already. We are not in disagreement other than 11% equity declines can be of worry to anyone in withdrawl phase, especially if one takes a long term perspective of history: http://crawlingroad.com/blog/ ("Consider this, how many governments still exist today that existed 100 years ago out of hundreds of countries? By my count, maybe six? U.S., Canada, Britain, New Zealand, Australia, Switzerland? ")
Systemic problems of the economy have not been addressed and personally, I am given human nature and historical precedence, I think in some ways this is somewhat of a blithe way of looking at risk. Maybe that is why for the first time in three decades, I have bought gold.
Maybe I shouldn't be worried about systemic risk, but then again, I'm not Alfred E. Newman.

I think we're talking past each other a bit.

You are focused on that 11% equity decline and whether that is or is not a worry and you mentioned that it may be so for someone in withdrawal. I was using an example of someone in withdrawal with a rather common 40/60 portfolio. The 11% equity loss was buried in the overall AA rendering it almost unnoticeable. That's all I'm saying. The conservative portfolio that this investor holds had nothing close to an 11% decline. The bonds did fine and are the dominant component.

I pulled the price history of the lifestrategy fund that has the 40/60 AA I mentioned. Here are the high and low closing prices from 15 Sep - 15 Nov 2012:

High: 17.45
Low: 16.98 - the percentage difference is beyond irrelevant, no?

The equity decline in the last [however long] that caused the resurrection of this thread was a non-event for the investor you are talking about.

An 11% portfolio decline should maybe, possibly begin to get this investors attention. A NAV range of 16.98-17.45 should not.

[moneywise3]

OK, made me look. Haven't checked the Dow in several weeks. Can't find my magnifying glass, so let's just sorta look at the big picture without getting bogged down in fine details...



Nope, nothing much going on.

Awesome! This puts most questions to rest.

[floydtime]

OK, made me look. Haven't checked the Dow in several weeks. Can't find my magnifying glass, so let's just sorta look at the big picture without getting bogged down in fine details...



Nope, nothing much going on.

Awesome! This puts most questions to rest.

And during the times where there WAS much going on above, look a few years later. There still wasn't much going on.

[hoppy08520]

Well, I'm glad I shifted to cash last month in anticipation of the fiscal cliff freefall in US stocks

Just kidding, like all good Bogleheads, I stayed the course. I think I'll check my balances tomorrow morning

[Bongleur]

Are returns high enough to compensate for the RISK of another 40-50% market crash? Do you have a long enough time frame before retirement to RECOVER from another crash?

Can't talk about returns unless you also talk about the risks.

[STC]

Are returns high enough to compensate for the RISK of another 40-50% market crash? Do you have a long enough time frame before retirement to RECOVER from another crash?

Can't talk about returns unless you also talk about the risks.

Can't talk about risks without the context of the complete AA...

[ofcmetz]

Are returns high enough to compensate for the RISK of another 40-50% market crash? Do you have a long enough time frame before retirement to RECOVER from another crash?

Can't talk about returns unless you also talk about the risks.

No party poopers allowed in this thread. (I'm kidding).

Your point is well taken which is why we all should invest wisely.

So is the stock market in a free rise now? Anyone looking to time things and went to all cash before the end of the year choose poorly. (A friend of mine told me he was going to do this).

[Index Fan]

The bottom line is- nobody knows nothin'. Set an AA you can live with and stay the course.

[umfundi]

Well,

At least I made all my tax-advantaged investments for 2012 during 2012. I'm ready to fund 2013 IRAs, etc., but it was impossible to buy before the +2.5% of January 2.

Keith

[Jay69]

So is the stock market in a free rise now? Anyone looking to time things and went to all cash before the end of the year choose poorly. (A friend of mine told me he was going to do this).

I sense a new thread "U.S. stocks in a free rise"! I wonder what would get more hits this thread or a free rise thread.

This thread should be called "U.S. Stocks Free Falling", good tune by Mr. Petty but I digress

[STC]

So is the stock market in a free rise now? Anyone looking to time things and went to all cash before the end of the year choose poorly. (A friend of mine told me he was going to do this).

I sense a new thread "U.S. stocks in a free rise"! I wonder what would get more hits this thread or a free rise thread.

This thread should be called "U.S. Stocks Free Falling", good tune by Mr. Petty but I digress

I believe there are studies which suggest that fear/pain of losing money is 2x more powerful psychologically then gain/greed. So I would expect 1/2 the number of posts if the thread were called "U.S. Stocks in a Free Rise!"

[yukon50]

DOW is down by over 550 points with a couple hours of trading left. Trading halt on the way?

VTI is up 36% since this thread started.

Where's LBill?

[letsgobobby]

Plus dividends.

This thread stands as a pantheon to the follies of market-timing.

[ofcmetz]

Plus dividends.

This thread stands as a pantheon to the follies of market-timing.

Since I just started investing this January, I was wondering why anyone would want to be in anything other than 100% equities?

[crowd79]

Dow's up 4,000 since that supposed August "Freefall". Glad I stayed the course. I added to my portfolio by buying more shares of VTIVX (2045 Target Retirement) at that time while everyone else was selling...

[Sheepdog]

Now we have other doomsday forecasters like then, such as today: http://finance.yahoo.com/blogs/breakout ... 19654.html
Even the most optimistic investors are getting a bit antsy these days, wondering how and when it's all going to end. For Tom Kee, president & CEO of Stock Traders Daily, the answer to that question is 'not well.'

"I'm looking for another high in this market, then I am looking for a turn down," Kee says in the attached video, adding that he believes it is "going to come relatively soon."

By downturn, however, what Kee real means is a crash to the tune of ''50 to 60%," which would bring the Dow Jones under 6,000.

A plunge of that size, over a span of weeks and months, is not unheard of. In fact, Kee says, the last time the Dow peaked in 2007 we saw it crash by that amount, just as it did following its previous high in 2000.

Stay the course! I did. I will.

[Browser]

Well, if this thread turned out to be a contrarian indicator when started during a severe market downturn, maybe the fact it is being revived at a market high will turn out to be a contrarian indicator once again.

[SSSS]

Whenever one of these old threads re-appears on the front page I briefly wonder if I missed something important by not watching TV news.

[Browser]

Well, if this thread turned out to be a contrarian indicator when started during a severe market downturn, maybe the fact it is being revived at a market high will turn out to be a contrarian indicator once again.

See, I told you. Is DOW 14,000 won and done?

[pjstack]

I just read somewhere that the Dow (or maybe the S&P 500) is the lowest it's been this year! The year being, what?, 65 days old!

Gasp! What to do!

Next we'll read that they are the highest (or lowest) since last Friday!

[umfundi]

I just read somewhere that the Dow (or maybe the S&P 500) is the lowest it's been this year! The year being, what?, 65 days old!

Gasp! What to do!

Next we'll read that they are the highest (or lowest) since last Friday!

The market was open today? I missed that.

Keith

[BBL]

I just read somewhere that the Dow (or maybe the S&P 500) is the lowest it's been this year! The year being, what?, 65 days old!
Gasp! What to do!

Next we'll read that they are the highest (or lowest) since last Friday!

pj - you are in dire need of a calendar.

[Bustoff]

Now we have other doomsday forecasters like then, such as today: http://finance.yahoo.com/blogs/breakout ... 19654.html
[i]Even the most optimistic investors are getting a bit antsy these days, wondering how and when it's all going to end. For Tom Kee, president & CEO of Stock Traders Daily, the answer to that question is 'not well.'

He needs to watch CNBC so he can be brought up to date about "The Great Rotation" out of bonds and into stocks.

Or other ridiculous predictions like, "When mutual fund investors pile into equities, it's usually a very negative sign for the market," legendary mutual fund titan Jack Bogle, founder and head of Vanguard, said in a CNBC interview Friday as the market staged a robust rally.
What!

[floydtime]

Looking at the charts, it is clear to me at least this is and has been a sideways market, and there are ways to make money in that too. But hey, BH is online group therapy. Keep repeating after me, the mantra: "stay the course, stay the course, stay . . . . ."

You're right - it worked!

[ofcmetz]

S&P was 1178 when this thread was started, and my portfolio has doubled since then. (And I'm not even counting dividends). Stay the course bogleheads. Keep following your plan even when things look bad and all the news is negative.

Edit: One of the things that I wish I had mentioned in the above post is the importance of my own saving's rate during the last year and a half since this post. Using only tax deferred or advantaged investments we saw what was a small six figure portfolio double during this time. I was entertained by the noise, but using what I learned here it did not change my behavior.

[Valuethinker]

S&P was 1178 when this thread was started, and my portfolio has doubled since then. (And I'm not even counting dividends). Stay the course bogleheads. Keep following your plan even when things look bad and all the news is negative.

I remember when it was 'Dow 36,000' and 'stocks provide real returns of 7% pa' in 2000.

The ironic thing is that the predictions for internet shopping, broadband penetration, internet access by mobile *all came true*-- within 1-2 years of the forecast data Mary Meeker and that were putting on their presentations. In fact mobile internet access is probably ahead of predictions.

Yet the stocks tanked. The TMT sector was something like 40% of US stock market at the peak (Tech-Media-Telecoms). AOL-Time Warner turned out to be the largest value destroying merger in history. Amazon reached its peak then, as a stock, I think without checking. It's now something like 10 times the size as a business, but not as a market capitalization. 1999 was the year Berkshire Hathaway, resolutely 'old economy' underperformed the S&P500 by something like 30%.

So the lesson is when things seem too good to be true, and it's a bright new future, then probably we have hit the peak.

Markets climb a 'wall of worry'. Lots to worry about, markets can still go up.

[floydtime]

This is, without a doubt, my favorite boglethread.

[ScottW]

AOL-Time Warner turned out to be the largest value destroying merger in history. Amazon reached its peak then, as a stock, I think without checking. It's now something like 10 times the size as a business, but not as a market capitalization.

The majority of tech stocks tanked (Lucent and Cisco are two great examples), but Amazon is one of the few companies that has actually done well. They peaked around $100/share at the end of 1999 but are now worth $256/share. It took them close to a decade to break $100, but over the past couple of years they've really taken off.

[rustymutt]

Seems to me that these types of post are designed to discourage investors and perhaps help out those betting on the bear. We've had many weeks now of up markets, and so a pull back means what? Come on guys, it's the way the markets work. You know, up one week down the next, but always long term positive slope. Just set it, and forget it. Nobody knows what is going to happen. I suspect that we'll see a huge increase tomorrow, but it's a guess based on what I've observed for years. I'm not planning any changes in my written investment plans.

[Bongleur]

>but always long term positive slope

Didn't somebody say something about "having reached a permanent plateau" in summer 1929?

[Toons]

AOL-Time Warner turned out to be the largest value destroying merger in history. Amazon reached its peak then, as a stock, I think without checking. It's now something like 10 times the size as a business, but not as a market capitalization.

The majority of tech stocks tanked (Lucent and Cisco are two great examples), but Amazon is one of the few companies that has actually done well. They peaked around $100/share at the end of 1999 but are now worth $256/share. It took them close to a decade to break $100, but over the past couple of years they've really taken off.

Amazon share price:
Oct 31, 2001 - 6.79 per share

[STC]

Freefall? LOL This doesnt even count as a correction. Its ~6.5% drop. Need a 10% drop before its a correction.

You might well get your wish . . . IWN is already down 10% from the top -11.5% (as I write), SPY down 8.2%. I would write something political, but it would only make me chagrined. Perhaps some people are happy about this.

Where is wshang?

[oragne lovre]

Just fluctuation.

That's what McArthur said to the Japanese in 1945.....

"I will return."

1942.

"The S&P will return."

"The S&P IS returning."
I have no idea which way it'll move one year from now though.

[yukon50]

I remember most people saying in Aug 2011 that it was way too early to rebalance into stocks. They thought 2008 was happening again. In reality, Aug 2011 was a great buying opportunity.

I think too many people are expecting 2008 to happen soon and it is costing them money.