Is a crash coming soon?

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lostdog
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Re: Is a crash coming soon?

Post by lostdog » Fri Oct 20, 2017 1:13 pm

These posts are popping up a lot more recently.
"Our life is frittered away by detail. Simplify, simplify." -Thoreau

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galeno
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Re: Is a crash coming soon?

Post by galeno » Fri Oct 20, 2017 1:18 pm

We keep "our age in FI". Conservative allocation. 40/60. We can withstand a bad bear market and lose 15% of port. My problem is that I'll want to seriously over-rebalance to 60/40 if that happens. I'll resist the temptation.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.4%. Port Yield = 2.0%. Term = 35 yr. FI Duration = 6.2 yr. Portfolio survival probability = 100%.

Houe
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Re: Is a crash coming soon?

Post by Houe » Fri Oct 20, 2017 1:23 pm

What if the market is never this low/cheap again? There are lots of price levels the market has passed and will never see again.

CULater
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Re: Is a crash coming soon?

Post by CULater » Fri Oct 20, 2017 2:01 pm

I remember that before the crash in 2000 everybody was aware of how nuts the market was, but they were making so much money every day that nobody wanted to get out. Then they all got creamed. This time, everybody is aware of how nuts the market is and making more noise about getting out. But I'm not sure how many are actually doing it. Mr. Market is a tricky b******d and is sure to mislead as many people as possible before hammer-time.
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

mervinj7
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Re: Is a crash coming soon?

Post by mervinj7 » Fri Oct 20, 2017 2:06 pm

CULater wrote:
Fri Oct 20, 2017 2:01 pm
I remember that before the crash in 2000 everybody was aware of how nuts the market was, but they were making so much money every day that nobody wanted to get out. Then they all got creamed. This time, everybody is aware of how nuts the market is and making more noise about getting out. But I'm not sure how many are actually doing it. Mr. Market is a tricky b******d and is sure to mislead as many people as possible before hammer-time.
If it makes you feel better, I rebalanced two days ago to bring my AA back in line. Does that count as getting out? :P

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Ged
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Re: Is a crash coming soon?

Post by Ged » Fri Oct 20, 2017 2:23 pm

Houe wrote:
Fri Oct 20, 2017 1:23 pm
What if the market is never this low/cheap again? There are lots of price levels the market has passed and will never see again.
It's the 2009 prices I don't expect to see again.

SundayMorning
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Re: Is a crash coming soon?

Post by SundayMorning » Fri Oct 20, 2017 2:31 pm

Is a crash coming soon?

My magic 8 ball says "without a doubt" :D
It has correctly predicted 9 of the last 2 crashes , which is on par with most of the experts. :wink:

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mickeyd
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Re: Is a crash coming soon?

Post by mickeyd » Fri Oct 20, 2017 2:33 pm

Yes, but it all depends on the meaning of "soon."
Part-Owner of Texas | | “The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle

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Alexa9
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Re: Is a crash coming soon?

Post by Alexa9 » Fri Oct 20, 2017 2:39 pm

I’ve been expecting a crash for years. I was obviously wrong. It’s really unpredictable so it’s best to hold stocks and bonds and rebalance at highs and lows. Your savings rate is really all you have to worry about. The market is out of our control.

Wakefield1
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Re: Is a crash coming soon?

Post by Wakefield1 » Fri Oct 20, 2017 3:38 pm

The crash is delayed yet one more day but when it comes hopefully it is one step backward after 3 steps forward.
A couple weeks ago $10,000. was sitting around doing nothing,I stuck it with an "invest by mail" slip in the post paid envelop and to my consternation the market kept jumping up before the transaction posted but it's still going up!

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Sandtrap
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Re: Is a crash coming soon?

Post by Sandtrap » Fri Oct 20, 2017 3:51 pm

Ged wrote:
Fri Oct 20, 2017 1:08 pm
Sandtrap wrote:
Fri Oct 20, 2017 10:21 am
How much of a decline is a "significant" decline?
Thanks.
j
This is what the NBER says:

http://www.nber.org/cycles/jan08bcdc_memo.pdf

It seems to me that they are looking for places where the slope changes sign, rather than peak to trough distances.
Thanks, "Ged"
Great write up. Easy to understand.
mahalo,
j

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DartThrower
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Re: Is a crash coming soon?

Post by DartThrower » Fri Oct 20, 2017 7:12 pm

I'm curious as to why so many investors seem more worried about an outright crash than a grinding, prolonged 20+% decline. Money seems to just vaporize in a sharp drop and that has a significant emotional aspect to it. But a slow and demoralizing decline doesn't seem to capture the imagination. After all the market has had a slow, steady incline this year, so maybe slow and steady is the era we're in for whatever reason (in both directions).

Perhaps with a more gradual decline there is the illusion that the investor will have time to recognize and adjust to the drop and get out while the getting's relatively good? But how do you know when it has started and when it will end, especially if it is so gradual? The declining market will come to seem like the new normal and lots of investors may sour on stocks. Our pessimistic views will continue to be confirmed week in and week out, imprinting on our brains the expectation of further disheartening declines. I think that's an even scarier scenario than a crash, yet so many posts here are about crashes. Under which scenario are investors more likely to deviate from the course: the crash or the slow decline?
A Boglehead can stay the course longer than the market can stay irrational. It's impossible to have a bubble in common sense.

Candor
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Re: Is a crash coming soon?

Post by Candor » Fri Oct 20, 2017 8:53 pm

If you put your mind to it there are a lot of reasons to think a crash may be coming soon. That wall of worry is always tall and I could have easily talked myself into the next crash many times over the last 25 years of my investing experience but I'm glad I just kept plugging along and hoping for the best.

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czeckers
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Re: Is a crash coming soon?

Post by czeckers » Sat Oct 21, 2017 7:51 am

Of course there is a crash coming... the problem is no one knows when nor its magnitude.

In 1996, Alan Greenspan warned about "Irrational exuberance" because signs of a market bubble were already evident. Had you gotten out of the market at that time, you would have missed a 140% rise in your stock portfolio (US Total Market) before the ensuing crash in early 2000. If you had stayed put and held on through the dot com bubble crash and subsequent 3-year US market decline, you would still have been up 50% at the end of 2002 relative to what your portfolio was worth in 1996. There is a penalty for getting out too early.

The key is to have enough high quality bonds (US treasury) to allow you to sleep well even if there is a crash. Then let your portfolio ride it out.

-K
The Espresso portfolio: | | 16% LCV, 16% SCV, 16% EM, 8% Int'l Value, 8% Int'l Sm, 8% US REIT, 8% Int'l REIT, 20% Inter-term US Treas | | "A journey of a thousand miles begins with a single step."

aqan
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Re: Is a crash coming soon?

Post by aqan » Sat Oct 21, 2017 8:12 am

These "market crash" threads are getting more and more annoying in my personal experience when they become unbearable they market will be ripe for a crash.
We could probably create a fear index out of these threads..
BTW OP checkout the "US stocks in free fall" thread.

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