Has the general public ever been correct about market crashes?

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JustinR
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Has the general public ever been correct about market crashes?

Post by JustinR » Fri Oct 20, 2017 4:47 pm

Everyone right now seems to think that a crash is imminent. Which makes me wonder if the exact opposite is true.

Has the public ever been right about anything market timing related?

Is "think the opposite of what everyone else thinks the market's headed" a viable strategy?

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Re: Has the general public ever been correct about market crashes?

Post by Longdog » Fri Oct 20, 2017 4:53 pm

JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Is "think the opposite of what everyone else thinks the market's headed" a viable strategy?
Yes, it’s called contrarian investing. Entire (actively managed) mutual funds have been based on that strategy, such as Fidelity Contrafund.
Steve

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Re: Has the general public ever been correct about market crashes?

Post by goblue100 » Fri Oct 20, 2017 4:54 pm

If the general stock buying public believed a crash was imminent, and acted accordingly, they would cause the the crash.
Some people are immune to good advice. - Saul Goodman

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Re: Has the general public ever been correct about market crashes?

Post by WhiteMaxima » Fri Oct 20, 2017 5:00 pm

ETF, index invest might cause more damage to good fair valued company. If investor panic sale, they don't damp just FANG stock. They dump VTI. Stock picker might then find value among these stock. I am not talking about market crush. I am talking about market correction.

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Re: Has the general public ever been correct about market crashes?

Post by TomatoTomahto » Fri Oct 20, 2017 5:13 pm

You know what they say about even a stopped clock being right twice a day.

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Re: Has the general public ever been correct about market crashes?

Post by DrGoogle2017 » Fri Oct 20, 2017 5:21 pm

Who is everyone? How do you know what they think?

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Re: Has the general public ever been correct about market crashes?

Post by WhiteMaxima » Fri Oct 20, 2017 5:21 pm

Usually the market is moved by institution investors. Not you. People are wondering now who is buying?

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Re: Has the general public ever been correct about market crashes?

Post by nisiprius » Fri Oct 20, 2017 5:35 pm

How do you measure what "the general public" thinks?

In general, the idea of doing the opposite of what "everyone else" is doing is called "contrarian investing," and it's one of various strategies people follow. None of them is the magic key to wealth. A lot of people believe in "momentum investing" and "trend following" which are more or less the opposite of contrarian investing. Other phrases that get bandied around are "value investing," "GARP" (growth at a reasonable price) and many others.

Most of them can't really be validated or tested because they aren't really spelled out in a way that would let them be tested.

I believe that the true contrary of investing the same way the general public invests is not doing the opposite of what the general public does. The true opposite is staying the course, doing nothing, and ignoring what "the general public" thinks.
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Re: Has the general public ever been correct about market crashes?

Post by arcticpineapplecorp. » Fri Oct 20, 2017 5:48 pm

nisiprius wrote:
Fri Oct 20, 2017 5:35 pm
How do you measure what "the general public" thinks?

In general, the idea of doing the opposite of what "everyone else" is doing is called "contrarian investing," and it's one of various strategies people follow. None of them is the magic key to wealth. A lot of people believe in "momentum investing" and "trend following" which are more or less the opposite of contrarian investing. Other phrases that get bandied around are "value investing," "GARP" (growth at a reasonable price) and many others.

Most of them can't really be validated or tested because they aren't really spelled out in a way that would let them be tested.

I believe that the true contrary of investing the same way the general public invests is not doing the opposite of what the general public does. The true opposite is staying the course, doing nothing, and ignoring what "the general public" thinks.
I think AAII measures "investor sentiment". By those measures the public's been pretty wrong about the best and worst time to buy stocks. I can't pull up the data right now but I believe Larry Swedroe talked about this in the past. The story goes (if anyone can find the data, I appreciate it) for example, when they started tracking investor sentiment was towards the end of 1999 and the sentiment was "bullish" which was wrong. The market fell in 2000 because of the dot com crash and other events.

Then another time they gauged sentiment was in 2009 during the Great Recession. What was the sentiment? Bearish of course. Which again, was wrong. 2009 was a great time to start buying, not selling.

So don't bother trying to read the tea leaves as they say. Just stick to your plan, whatever it might be. Get a second opinion from a professional fee only fiduciary certified financial planner if you're unsure. Remember the market's return INCLUDES not only the ups but also the downs. Could you do better avoiding the downs? Of course, but then that would be market timing. And as Jack Bogle has said:
“The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently.”
― John C. Bogle, Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor
source: https://www.goodreads.com/author/quotes ... hn_C_Bogle
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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Re: Has the general public ever been correct about market crashes?

Post by arcticpineapplecorp. » Fri Oct 20, 2017 5:55 pm

here's a link to AAII which asks if AAII surveys are a contrarian indicator:

http://www.aaii.com/journal/article/is- ... -indicator
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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Re: Has the general public ever been correct about market crashes?

Post by z3r0c00l » Fri Oct 20, 2017 6:21 pm

I have been going back through some of the oldest threads on this forum, to fall 2007 to see what people were saying just before things turned south. My impression is that no one had any idea what was about to happen which is no shock. News came out about mortgage issues and the story broke before the markets started to fall much. But that was not initially any different than the hundred other news events that cause us to worry about how stocks will react.

Here are two euphoric/fear threads that remind me of the several we are seeing now:
viewtopic.php?f=10&t=4130

viewtopic.php?f=10&t=4107

And here the problems start to appear:
viewtopic.php?f=10&t=4539

One poster indicated that they no longer had a need to take risk, and sold stocks for the year. Another dropped NVIDIA around 30 which was penny smart, but pound foolish 10 years later. A particularly brave poster indicated that if he could use leverage, he would go over 100% in stocks. The names may have changed, but the uncertainty is the same.

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Re: Has the general public ever been correct about market crashes?

Post by lazyday » Fri Oct 20, 2017 7:30 pm

JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Everyone right now seems to think that a crash is imminent.
AAII (thanks Arctic) is neutral to bullish now. Members don't seem to expect an imminent crash.

http://www.aaii.com/sentimentsurvey

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patrick013
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Re: Has the general public ever been correct about market crashes?

Post by patrick013 » Fri Oct 20, 2017 8:20 pm

This may be one time a high market doesn't result in a major
correction, and could run thru to a secondary business cycle.
But who is clairvoyant ? The general public at least has an opinion.

But here's what G.C. Selden said in 1912.

The greatest fault of ninety-nine out of one hundred investors is
being bullish at high prices and bearish at low prices. Therefore,
refuse to follow the market beyond what you consider a reasonable
climax, no matter how large the possible profits that you may appear
to be losing by inaction.
age in bonds, buy-and-hold, 10 year business cycle

JustinR
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Re: Has the general public ever been correct about market crashes?

Post by JustinR » Fri Oct 20, 2017 10:02 pm

lazyday wrote:
Fri Oct 20, 2017 7:30 pm
JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Everyone right now seems to think that a crash is imminent.
AAII (thanks Arctic) is neutral to bullish now. Members don't seem to expect an imminent crash.

http://www.aaii.com/sentimentsurvey
Hmmmm... Maybe that means that a crash IS imminent then?

Someone should do a study of how that survey did the week before huge crashes.

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Re: Has the general public ever been correct about market crashes?

Post by CyclingDuo » Fri Oct 20, 2017 10:18 pm

https://finance.yahoo.com/news/market-s ... 02624.html

There are 4 types of people in this market:

Good read about the sentiment.

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Re: Has the general public ever been correct about market crashes?

Post by AlohaJoe » Fri Oct 20, 2017 10:32 pm

JustinR wrote:
Fri Oct 20, 2017 10:02 pm
lazyday wrote:
Fri Oct 20, 2017 7:30 pm
JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Everyone right now seems to think that a crash is imminent.
AAII (thanks Arctic) is neutral to bullish now. Members don't seem to expect an imminent crash.

http://www.aaii.com/sentimentsurvey
Hmmmm... Maybe that means that a crash IS imminent then?

Someone should do a study of how that survey did the week before huge crashes.
Didn't arcticpineapple already post a link to a study that does that?

JustinR
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Re: Has the general public ever been correct about market crashes?

Post by JustinR » Fri Oct 20, 2017 10:42 pm

AlohaJoe wrote:
Fri Oct 20, 2017 10:32 pm
JustinR wrote:
Fri Oct 20, 2017 10:02 pm
lazyday wrote:
Fri Oct 20, 2017 7:30 pm
JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Everyone right now seems to think that a crash is imminent.
AAII (thanks Arctic) is neutral to bullish now. Members don't seem to expect an imminent crash.

http://www.aaii.com/sentimentsurvey
Hmmmm... Maybe that means that a crash IS imminent then?

Someone should do a study of how that survey did the week before huge crashes.
Didn't arcticpineapple already post a link to a study that does that?
Sorry missed it. It's behind a paywall so I can't read it, but from other replies it seems that the people who take the survey are mostly wrong?

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Re: Has the general public ever been correct about market crashes?

Post by avalpert » Fri Oct 20, 2017 10:59 pm

JustinR wrote:
Fri Oct 20, 2017 10:42 pm
AlohaJoe wrote:
Fri Oct 20, 2017 10:32 pm
JustinR wrote:
Fri Oct 20, 2017 10:02 pm
lazyday wrote:
Fri Oct 20, 2017 7:30 pm
JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Everyone right now seems to think that a crash is imminent.
AAII (thanks Arctic) is neutral to bullish now. Members don't seem to expect an imminent crash.

http://www.aaii.com/sentimentsurvey
Hmmmm... Maybe that means that a crash IS imminent then?

Someone should do a study of how that survey did the week before huge crashes.
Didn't arcticpineapple already post a link to a study that does that?
Sorry missed it. It's behind a paywall so I can't read it, but from other replies it seems that the people who take the survey are mostly wrong?
How could someone be wrong about how they feel?

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Re: Has the general public ever been correct about market crashes?

Post by lazyday » Sat Oct 21, 2017 1:11 am

JustinR wrote:
Fri Oct 20, 2017 10:42 pm
It's behind a paywall so I can't read it, but from other replies it seems that the people who take the survey are mostly wrong?
After I closed the popup ad twice, I was able to read the article.

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Re: Has the general public ever been correct about market crashes?

Post by oldcomputerguy » Sat Oct 21, 2017 5:40 am

goblue100 wrote:
Fri Oct 20, 2017 4:54 pm
If the general stock buying public believed a crash was imminent, and acted accordingly, they would cause the the crash.
As Lazarus Long once noted, our economy is controlled largely by positive feedback. (If you're not sure why that's bad, look up "oscillation".)
Anybody know why there's a 20-pound frozen turkey up in the light grid?

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Re: Has the general public ever been correct about market crashes?

Post by TheHouse7 » Sat Oct 21, 2017 5:51 am

patrick013 wrote:
Fri Oct 20, 2017 8:20 pm
This may be one time a high market doesn't result in a major
correction
, and could run thru to a secondary business cycle.
But who is clairvoyant ? The general public at least has an opinion.

But here's what G.C. Selden said in 1912.

The greatest fault of ninety-nine out of one hundred investors is
being bullish at high prices and bearish at low prices. Therefore,
refuse to follow the market beyond what you consider a reasonable
climax, no matter how large the possible profits that you may appear
to be losing by inaction.
This time is different... :twisted:
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

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JoMoney
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Re: Has the general public ever been correct about market crashes?

Post by JoMoney » Sat Oct 21, 2017 6:46 am

JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Everyone right now seems to think that a crash is imminent. Which makes me wonder if the exact opposite is true.

Has the public ever been right about anything market timing related?

Is "think the opposite of what everyone else thinks the market's headed" a viable strategy?
Generally speaking, I'm with you. I tend to worry less about the things everybody is pointing out. I'm not saying a market crash won't happen, but I think the CAPE or valuation reasoning is overblown (especially in such a low interest rate environment).

I don't think "doing the opposite" is necessarily a good strategy either. Good contrarians aren't just opposites, they do things nobody else is even looking at.

An interesting idea, I think, is something Ken Fisher proposed in one of his books/articles, I have no idea how successful it is, but he suggests going out and collecting the short term estimates from lots analysts and public pundits, divide their opinions into one of four categories:
"Up a lot", "Up a little" , "Down a little", "Down a lot" ... he suggests that once you do that you'll see the cluster of what the consensus is expecting... and whatever the consensus is expecting is what WILL NOT HAPPEN :? one of the other three options will...
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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JoMoney
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Re: Has the general public ever been correct about market crashes?

Post by JoMoney » Sat Oct 21, 2017 7:18 am

JoMoney wrote:
Sat Oct 21, 2017 6:46 am
JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Everyone right now seems to think that a crash is imminent. Which makes me wonder if the exact opposite is true.

Has the public ever been right about anything market timing related?

Is "think the opposite of what everyone else thinks the market's headed" a viable strategy?
Generally speaking, I'm with you. I tend to worry less about the things everybody is pointing out. I'm not saying a market crash won't happen, but I think the CAPE or valuation reasoning is overblown (especially in such a low interest rate environment).

I don't think "doing the opposite" is necessarily a good strategy either. Good contrarians aren't just opposites, they do things nobody else is even looking at.

An interesting idea, I think, is something Ken Fisher proposed in one of his books/articles, I have no idea how successful it is, but he suggests going out and collecting the short term estimates from lots analysts and public pundits, divide their opinions into one of four categories:
"Up a lot", "Up a little" , "Down a little", "Down a lot" ... he suggests that once you do that you'll see the cluster of what the consensus is expecting... and whatever the consensus is expecting is what WILL NOT HAPPEN :? one of the other three options will...
For S&G's :mrgreen: I took the Bogleheads 2017 opinion from the annual contest https://www.lostoak.com/ls/diehards/con ... fault.aspx
There were 647 guesses in the contest
The S&P 500 opened 2017 at 2,251.57
142 people guessed an amount of +10% or higher
300 people guessed an amount >0 but <+10%
95 people guessed an amount <0 but >-10%
110 people guessed an amount of a loss more than -10%

So using the Fisher idea, it would suggest that 2017 will NOT be a "Up a little" year... something else will happen.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Has the general public ever been correct about market crashes?

Post by k66 » Sat Oct 21, 2017 10:16 am

JoMoney wrote:
Sat Oct 21, 2017 6:46 am
...
An interesting idea, I think, is something Ken Fisher proposed in one of his books/articles, I have no idea how successful it is, but he suggests going out and collecting the short term estimates from lots analysts and public pundits, divide their opinions into one of four categories:
"Up a lot", "Up a little" , "Down a little", "Down a lot" ... he suggests that once you do that you'll see the cluster of what the consensus is expecting... and whatever the consensus is expecting is what WILL NOT HAPPEN :? one of the other three options will...
A crafty way of being right 75% of the time! 8-)
LOSER of the Boglehead Contest 2015 | lang may yer lum reek

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Re: Has the general public ever been correct about market crashes?

Post by TheTimeLord » Sat Oct 21, 2017 10:27 am

Longdog wrote:
Fri Oct 20, 2017 4:53 pm
JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Is "think the opposite of what everyone else thinks the market's headed" a viable strategy?
Yes, it’s called contrarian investing. Entire (actively managed) mutual funds have been based on that strategy, such as Fidelity Contrafund.
longdog,

Isn't this also the essence of value investing, buying what is out of favor, as opposed to momentum investing buying what is hot.
Run, You Clever Boy!

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Re: Has the general public ever been correct about market crashes?

Post by nedsaid » Sat Oct 21, 2017 10:28 am

JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Everyone right now seems to think that a crash is imminent. Which makes me wonder if the exact opposite is true.

Has the public ever been right about anything market timing related?

Is "think the opposite of what everyone else thinks the market's headed" a viable strategy?
No one that I am aware of has ever successfully predicted a crash more than once and this happens for one of two reasons. First, the forecaster gets lucky. Second, the forecaster is relentlessly bearish and has preached doom and gloom for years, the case of a broken clock being wrong twice a day. Eventually a crash will come.
A fool and his money are good for business.

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Re: Has the general public ever been correct about market crashes?

Post by nedsaid » Sat Oct 21, 2017 10:35 am

JoMoney wrote:
Sat Oct 21, 2017 6:46 am

An interesting idea, I think, is something Ken Fisher proposed in one of his books/articles, I have no idea how successful it is, but he suggests going out and collecting the short term estimates from lots analysts and public pundits, divide their opinions into one of four categories:
"Up a lot", "Up a little" , "Down a little", "Down a lot" ... he suggests that once you do that you'll see the cluster of what the consensus is expecting... and whatever the consensus is expecting is what WILL NOT HAPPEN :? one of the other three options will...
This is actually not a bad idea. The problem is that it used to be you were up against other humans. Now you are up against very smart humans and the robots. The robots never get tired and can crunch all of this 24-7 where analysts at least need time off to sleep. My suspicion is that contrarian strategies are getting harder to execute. Plus most money now is run by institutions, many fewer naïve investors to take advantage of. Not only that, those pesky academics keep publishing papers on market anomalies and that in turn makes contrarian investing even more difficult.

For about three years now, I have been banging the drums for plain old boring Large Cap Value. Relative valuations look very good against Large Cap Growth. I was right in 2016 but 2017 has reverted back to a Large Cap Growth market. It is the old being right too early problem.
A fool and his money are good for business.

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Re: Has the general public ever been correct about market crashes?

Post by TheTimeLord » Sat Oct 21, 2017 10:37 am

JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Everyone right now seems to think that a crash is imminent. Which makes me wonder if the exact opposite is true.

Has the public ever been right about anything market timing related?

Is "think the opposite of what everyone else thinks the market's headed" a viable strategy?
The market is priced on what everyone thinks they know so almost by definition market moves are caused by people learning something new and changing there views. Of course index investors assume they (and everyone else) knows nothing so they invest on regular basis and accept the market will have its ups and downs.

But I challenge the concept everything thinks a crash is imminent, because if they really did wouldn't they have pulled their money out. I would say a lot of people are very uneasy because the length of the bull market and have virtually no understanding of the types of events that end bull markets. For years it has been said this is the most hated bull market in history, people are holding their noses and investing, which is likely one of the factors that keeps it going because nobody seems to be saying this is great time to go all in (even though it was, note I didn't says is because I don't know the future).
Run, You Clever Boy!

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JoMoney
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Re: Has the general public ever been correct about market crashes?

Post by JoMoney » Sat Oct 21, 2017 10:52 am

nedsaid wrote:
Sat Oct 21, 2017 10:35 am
... For about three years now, I have been banging the drums for plain old boring Large Cap Value. Relative valuations look very good against Large Cap Growth. I was right in 2016 but 2017 has reverted back to a Large Cap Growth market. It is the old being right too early problem.[/color]
If you're only looking at typical valuation metrics, then "Value" will always look 'cheap' compared to "Growth" the way it's divided up in benchmarks. The problem with trying to pick better performing stocks is you have pick stocks (or styles, or sectors) that are being priced wrong relative to their future growth, and that's a very difficult game... nobody is willingly giving away extra money.
The story that always appealed to me was the 'Growth At a Reasonable Price - GARP' that seemed to look for quality companies with reasonable sustainable prospects selling at (what looks like) relatively below average prices... a nice idea, but in practice it's not any easier to find mispricing in the average range of stocks then at the extremes of growth/value.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Has the general public ever been correct about market crashes?

Post by dm200 » Sat Oct 21, 2017 10:53 am

I have no idea or expertise in predicting the market - but I once saw an article by someone who had this view about market sentiment and the direction of the stock market.

If everyone moves to the belief that the market will go up in the future, they will all put their money into the market - driving it up. Then, when everyone now believes the market will go up - and put everything in the market because of this belief - there is now no more money available to drive prices up further at all. The market cannot go up - so it will either stay flat of fall.

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Re: Has the general public ever been correct about market crashes?

Post by Longdog » Sat Oct 21, 2017 11:05 am

TheTimeLord wrote:
Sat Oct 21, 2017 10:27 am
Longdog wrote:
Fri Oct 20, 2017 4:53 pm
JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Is "think the opposite of what everyone else thinks the market's headed" a viable strategy?
Yes, it’s called contrarian investing. Entire (actively managed) mutual funds have been based on that strategy, such as Fidelity Contrafund.
longdog,

Isn't this also the essence of value investing, buying what is out of favor, as opposed to momentum investing buying what is hot.
Yes, you’re right. If not identical, they are very similar. Buying what is currently out of favor as perceived by the masses, in anticipation that eventually its true value will be recognized.
Steve

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nedsaid
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Re: Has the general public ever been correct about market crashes?

Post by nedsaid » Sat Oct 21, 2017 11:05 am

JoMoney wrote:
Sat Oct 21, 2017 10:52 am
nedsaid wrote:
Sat Oct 21, 2017 10:35 am
... For about three years now, I have been banging the drums for plain old boring Large Cap Value. Relative valuations look very good against Large Cap Growth. I was right in 2016 but 2017 has reverted back to a Large Cap Growth market. It is the old being right too early problem.[/color]
If you're only looking at typical valuation metrics, then "Value" will always look 'cheap' compared to "Growth" the way it's divided up in benchmarks. The problem with trying to pick better performing stocks is you have pick stocks (or styles, or sectors) that are being priced wrong relative to their future growth, and that's a very difficult game... nobody is willingly giving away extra money.
The story that always appealed to me was the 'Growth At a Reasonable Price - GARP' that seemed to look for quality companies with reasonable sustainable prospects selling at (what looks like) relatively below average prices... a nice idea, but in practice it's not any easier to find mispricing in the average range of stocks then at the extremes of growth/value.
The other reason I have been beating the drums for Large Value is that it has underperformed the market since the 2008-2009 financial crisis. If you believe in reversion to the mean, at some point Value will be in favor again. Growth has done well in part because of low interest rates and a slow growth economy. If the economy picks up steam, this will bode well for Value.

I also like Growth At A Reasonable Price, sort of a hybrid between Value and Growth, so I am not strictly a Value guy. I like to buy the fine Cuban cigars on sale and not pick up cigar butts for the last few puffs.

Markets are fairly efficient and getting more so despite the trend towards indexing. If factor investing is a risk story, the markets will cause the factors such as Value to go away and probably for good. This would be because of the academic research and the robots cranking away 24/7. My belief is that factors are based upon human nature and human behavior. We will see who is right. I don't know, maybe the robots will take all the emotion out of investing. I doubt that, indeed I think the robots will exacerbate the effect of emotion.
A fool and his money are good for business.

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Re: Has the general public ever been correct about market crashes?

Post by harvestbook » Sat Oct 21, 2017 1:42 pm

Bulls experience long years of irrational exuberance and bears get fleeting moments of grim satisfaction.
I'm not smart enough to know, and I can't afford to guess.

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Re: Has the general public ever been correct about market crashes?

Post by Wakefield1 » Sat Oct 21, 2017 1:44 pm

"Growth has done well in part" could it be due to dividend adverse investors?
(Generally things such as "small cap growth index" have lower dividend payout than their counterpart "small cap value index")
It seems that there is always someone predicting a crash
some crashes are worse than others
if enough people decide that there will be a crash and get out of the market will that cause a crash?

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Re: Has the general public ever been correct about market crashes?

Post by John Laurens » Sat Oct 21, 2017 2:37 pm

Maybe mods could go through the posts from 2007 and 2009 and award a badge or emblem to the usernames of the BH’s whom espoused a consistent BH philosophy throughout those bull/bear markets.

Regards,
John

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Phineas J. Whoopee
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Re: Has the general public ever been correct about market crashes?

Post by Phineas J. Whoopee » Sat Oct 21, 2017 2:51 pm

An oldie, but a goodie:

What you think about the market doesn't matter. What matters is what everybody else thinks.

The problem is everybody else knows that too, so you have to figure out what everybody else thinks everybody else thinks.

:wink:

PJW

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Re: Has the general public ever been correct about market crashes?

Post by 2015 » Sun Oct 22, 2017 10:22 am

You might want to read this. Be sure to click on the Business Insider link within. I scrolled back all the way to 2013 bearish predictions. It's enlightening how wrong these "experts" can be and yet they still keep "predicting" (even Bogle's got a prediction in there):

http://thereformedbroker.com/2017/10/20 ... emergency/

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BenfromToronto
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Re: Has the general public ever been correct about market crashes?

Post by BenfromToronto » Sun Oct 22, 2017 5:35 pm

If we all agree that one cannot predict the market, why do we keep trying doing it?

Because it is unsatisfactory and unpleasant to keep investing in a hot market when one believes it is overvalued -- e.g., by using a Dollar Cost Averaging (DCA) strategy. On the other hand, there is the fear of missing additional gains by getting out or staying out of a rising market.

I just posted a new thread proposing that a contrarian strategy can be implemented successfully and solve this problem (the thread is titled: "I believe one can beat the market with a simple contrarian strategy. Am I a fool?"). BH experts informed me that I had "rediscovered" and modified a well-studied strategy called dollar value averaging (DVA). I think it is a nice solution to the vexing issue of trying to make rational decisions while knowing that one is unable to predict what will happen.
Last edited by BenfromToronto on Sun Oct 22, 2017 7:57 pm, edited 1 time in total.
Becoming rich slowly is simple --earn, save, invest following a Bogleheads philosophy-- but it is not easy.

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Phineas J. Whoopee
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Re: Has the general public ever been correct about market crashes?

Post by Phineas J. Whoopee » Sun Oct 22, 2017 6:45 pm

BenfromToronto wrote:
Sun Oct 22, 2017 5:35 pm
...
What do you think?
I think it would be better, in terms of forum organization, if you limited your question, and everybody else limited their answers, to the (so far 24-reply, not including your own) thread you referred to that you already started.
PJW

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Re: Has the general public ever been correct about market crashes?

Post by Johnnie » Sun Oct 22, 2017 7:49 pm

JoMoney wrote:
Sat Oct 21, 2017 6:46 am
JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Everyone right now seems to think that a crash is imminent. Which makes me wonder if the exact opposite is true.

Has the public ever been right about anything market timing related?

Is "think the opposite of what everyone else thinks the market's headed" a viable strategy?
Generally speaking, I'm with you. I tend to worry less about the things everybody is pointing out. I'm not saying a market crash won't happen, but I think the CAPE or valuation reasoning is overblown (especially in such a low interest rate environment).

I don't think "doing the opposite" is necessarily a good strategy either. Good contrarians aren't just opposites, they do things nobody else is even looking at...
Makes me think about what Larry Swedroe says about factors, that to be valid one should be "persistent, pervasive, robust, investable and intuitive."

That's a pretty good screen for all kinds of market and other phenomenon, come to think of it.

~~~~~~~~
CyclingDuo wrote:
Fri Oct 20, 2017 10:18 pm
https://finance.yahoo.com/news/market-s ... 02624.html

There are 4 types of people in this market:

Good read about the sentiment.
Entertaining, but he left out a growing fifth category: Buy-and-hold index fund investors who don't peek (much).
"I know nothing."

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BenfromToronto
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Re: Has the general public ever been correct about market crashes?

Post by BenfromToronto » Sun Oct 22, 2017 8:04 pm

Phineas J. Whoopee wrote:
Sun Oct 22, 2017 6:45 pm
BenfromToronto wrote:
Sun Oct 22, 2017 5:35 pm
...
What do you think?
I think it would be better, in terms of forum organization, if you limited your question, and everybody else limited their answers, to the (so far 24-reply, not including your own) thread you referred to that you already started.
PJW
Thank you for the advice.
I agree and I have edited my earlier post, deleting the question.
Becoming rich slowly is simple --earn, save, invest following a Bogleheads philosophy-- but it is not easy.

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Phineas J. Whoopee
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Re: Has the general public ever been correct about market crashes?

Post by Phineas J. Whoopee » Mon Oct 23, 2017 5:44 pm

BenfromToronto wrote:
Sun Oct 22, 2017 5:35 pm
If we all agree that one cannot predict the market, why do we keep trying doing it?
...
We don't. We know better. Welcome to bogleheads.org, where we don't do that.
PJW

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Re: Has the general public ever been correct about market crashes?

Post by sco » Mon Oct 23, 2017 11:56 pm

JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Has the public ever been right about anything market timing related?
The public is always right on market timing.

It is just a matter of the timeframe.

it will always go down some, and up some..

munemaker
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Re: Has the general public ever been correct about market crashes?

Post by munemaker » Tue Oct 24, 2017 3:48 am

Has the general public ever been correct about (predicting) market crashes?

Even a broken clock is right twice a day.

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Re: Has the general public ever been correct about market crashes?

Post by basspond » Tue Oct 24, 2017 6:37 am

My definition of general public are the ones who will jump off a listing ship in the middle of the ocean with out a life jacket or boat. So yes, when the market goes down they will be right but how do I account for the last four years they have been saying that?

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Re: Has the general public ever been correct about market crashes?

Post by ryman554 » Tue Oct 24, 2017 8:15 am

harvestbook wrote:
Sat Oct 21, 2017 1:42 pm
Bulls experience long years of irrational exuberance and bears get fleeting moments of grim satisfaction.
Talk to the Japanese circa last 20 years....

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Re: Has the general public ever been correct about market crashes?

Post by alfaspider » Tue Oct 24, 2017 8:24 am

In my experience, the general public seems to be the cause of market crashes. So in that sense, they are quite correct. The market will crash when enough people are so nervous it will crash that they sell.

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Re: Has the general public ever been correct about market crashes?

Post by asif408 » Tue Oct 24, 2017 8:29 am

JustinR wrote:
Fri Oct 20, 2017 4:47 pm
Has the public ever been right about anything market timing related?

Is "think the opposite of what everyone else thinks the market's headed" a viable strategy?
When you say "public", I assume you mean the most popular views among investors (which would include pension fund managers, Wall Street types, etc.). As a whole, the public is typically wrong about market timing related items, but they are right occasionally. Pundits are usually right eventually, but the problem is they predict 10 times the number of crashes that actually happen, so their batting average is pretty low. Not really much use.

So what would the opposite investment approach currently be, in your opinion? I actually agree the opposite is a viable strategy, but you have to be able to define an opposite strategy. And if the opposite approach lags for many years, how long would it take until you give up on it?

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