A 4% move in the Dow and S&P in 12 days? Seems odd

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AtlasShrugged?
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A 4% move in the Dow and S&P in 12 days? Seems odd

Post by AtlasShrugged? » Tue Jan 16, 2018 9:47 am

Bogleheads....I am struggling to recall a time where 'Mr. Market' moved like this in 12 days [the wild gyrations of 2008-09 do not count, totally different circumstance]. That 4% move is pretty amazing. I am sitting here shaking my head and saying: Go!. :mrgreen:

At what point do you stop and say to yourself, "This party cannot go on".

What I am looking for are behavioral signs. What specific behaviors do you observe that make that light bulb go off in your head?
“If you don't know, the thing to do is not to get scared, but to learn.”

livesoft
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by livesoft » Tue Jan 16, 2018 9:49 am

It was the beginning of 2015, so not that long ago. Or the last 2 weeks of 2013. Or ....

Basically, it is a pretty routine phenomenon.

The light bulb is always on in my head.
Last edited by livesoft on Tue Jan 16, 2018 9:52 am, edited 2 times in total.
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by BuckyBadger » Tue Jan 16, 2018 9:50 am

JCE66 wrote:
Tue Jan 16, 2018 9:47 am
Bogleheads....I am struggling to recall a time where 'Mr. Market' moved like this in 12 days [the wild gyrations of 2008-09 do not count, totally different circumstance]. That 4% move is pretty amazing. I am sitting here shaking my head and saying: Go!. :mrgreen:

At what point do you stop and say to yourself, "This party cannot go on".

What I am looking for are behavioral signs. What specific behaviors do you observe that make that light bulb go off in your head?
Does it matter, though? Would you do something other than stay the course no matter what happened in the last 12 days? Let's say you think "the party can't go on." What are you going to do with this knowledge?

I'm going to keep doing what I've been doing regardless of the party, so the last 12 days and the next 12 days are irrelevant to me.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by AlohaJoe » Tue Jan 16, 2018 9:50 am

It happens all the time.

Instead of "struggling to recall" why not look at the actual data and tell us whether this is a two standard deviation event or not?

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by onourway » Tue Jan 16, 2018 9:54 am

I've read many times here that most of the market's big moves happen in just a handful of days every decade, but haven't been paying attention for long enough to actually witness it. Curious if we are now in one of those periods or if those really big days are typically even more extreme than this?

livesoft
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by livesoft » Tue Jan 16, 2018 9:55 am

Really big days are more extreme than this. But the recent gains are quite nice and nothing to sneer at.
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Helo80 » Tue Jan 16, 2018 9:57 am

onourway wrote:
Tue Jan 16, 2018 9:54 am
I've read many times here that most of the market's big moves happen in just a handful of days every decade, but haven't been paying attention for long enough to actually witness it.
There's an article floating around BH that addresses this issue... that bull runs and huge returns generally are limited to a few select weeks/months at random throughout a period of time while the rest of the months are ho-hum and/or loss of monies.

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AtlasShrugged?
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by AtlasShrugged? » Tue Jan 16, 2018 10:03 am

Does it matter, though? Would you do something other than stay the course no matter what happened in the last 12 days?
Buckybadger....Nope, I will stay the course. I thought Mr. Larimore's response to a question I posed to him in 2016 in the 'famous Sheepdog thread' made a lot of sense and has stayed with me.
Stay the course. No matter what happens, stick to your program. I've said "Stay the course" a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you."
[Jack Bogle]

That being said, I just do not recall anything quite like this. Meaning, the 'zeitgeist' to me is not the same as 83-87 or 95-99. A distinctly different feel. So I am wondering if there are specific behavioral cues that people look for to tell them, "Yo, this party feels like it is coming to an end". For example, I just don't see tons of articles saying the bull will go on and on because this time is is just different. Quite the opposite.

livesoft...Yeah, I hear you.
“If you don't know, the thing to do is not to get scared, but to learn.”

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by tarmangani » Tue Jan 16, 2018 10:03 am

This helps to underscore an, imo, incredibly important point: time IN the market is better than timINg the market.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by H-Town » Tue Jan 16, 2018 10:04 am

JCE66 wrote:
Tue Jan 16, 2018 9:47 am
Bogleheads....I am struggling to recall a time where 'Mr. Market' moved like this in 12 days [the wild gyrations of 2008-09 do not count, totally different circumstance]. That 4% move is pretty amazing. I am sitting here shaking my head and saying: Go!. :mrgreen:

At what point do you stop and say to yourself, "This party cannot go on".

What I am looking for are behavioral signs. What specific behaviors do you observe that make that light bulb go off in your head?
Yeah.. this is one of the periods that hurt the people with cash on the sideline.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by k66 » Tue Jan 16, 2018 10:04 am

Recent >5% jump-ups in the S&P 500 (over a 2-week period):

+7.6% in July 2016
+6.5% in Feb 2016
+7.2% in Oct 2015
+5.1% in Feb 2015
+7.1% in Oct 2014
+5.7% in Feb 2014
+6.0% in Oct 2013
+5.0% in Jul 2013
...

The list goes on (I only searched back to 2013). I guess it's as odd as you want it to be.
LOSER of the Boglehead Contest 2015 | lang may yer lum reek

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by bgf » Tue Jan 16, 2018 10:13 am

markets go up and down. the moves appear random to us, and large moves are quite frequent. i don't find this odd or that interesting. i find people's reactions to it VERY interesting.

i just thought of my co-worker, who sold all his equities and went 100% bonds and cash just before the election... i hope he got back in shortly thereafter, but human psychology being what it is, id be willing to bet he's still sitting in bonds and cash, waiting for the obvious crash that must, just MUST, ABSOLUTELY HAS TO BE COMING!!$! getting angrier and angrier at this crazy market that just keeps going up up and away.

i just went back to my tax lots, my last purchase of VTI (which is only 30% of my portfolio anyway) was ~$110 per share. that market can drop all the way down to there and i'd still be in the green on every single one of my VTI purchases...
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Greg in Idaho » Tue Jan 16, 2018 10:28 am

bgf wrote:
Tue Jan 16, 2018 10:13 am

i just thought of my co-worker, who sold all his equities and went 100% bonds and cash just before the election...
I had a co-worker get wiped out in 08-09...got out just after that and never got back in... :shock:

I run into him occasionally, and really like seeing him (good guy), but there is always this mental asterisk in my head when I think about him...

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Dottie57 » Tue Jan 16, 2018 10:28 am

I think the recent tax "reforms" have added to the market projections of increased profit. So I expect 2018 to be airly good investment wise.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Toons » Tue Jan 16, 2018 10:32 am

What specific behaviors do you observe that make that light bulb go off in your head?

After a pattern continues long enough that the masses think it is the "New Norm".
Record ,Massive Inflows to an asset class.
Chasing Performance.
Greed.



:mrgreen: :mrgreen:
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Wakefield1 » Tue Jan 16, 2018 10:33 am

I believe I heard some market guru say that upside moves or toppings end when the bulk of the investing public (including new investors drawn to the excitement of the rising market?) runs out of new money to throw in

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by drg02b » Tue Jan 16, 2018 10:41 am

Greg in Idaho wrote:
Tue Jan 16, 2018 10:28 am
but there is always this mental asterisk in my head when I think about him...
*Past performance is not a guarantee of future returns?

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by bgf » Tue Jan 16, 2018 10:42 am

Toons wrote:
Tue Jan 16, 2018 10:32 am
What specific behaviors do you observe that make that light bulb go off in your head?

After a pattern continues long enough that the masses think it is the "New Norm".
Record ,Massive Inflows to an asset class.
Chasing Performance.
Greed.



:mrgreen: :mrgreen:
that's interesting because, just like new all time highs for markets, record inflows are to be expected... you have growing populations, low unemployment, 'nudged' retirement investment... all the 'fundamentals' point to increasing 'fund flows.' you would expect that to happen regardless of perceived market valuation.
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by drg02b » Tue Jan 16, 2018 10:44 am

Every time I think the market is overvalued during the current run, I look at this graph:

https://www.ftportfolios.com/Common/Con ... 8ff9bfe12d

Then I realize we COULD only be halfway there and I keep reminding myself to keep investing.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by flyingaway » Tue Jan 16, 2018 10:46 am

livesoft wrote:
Tue Jan 16, 2018 9:55 am
Really big days are more extreme than this. But the recent gains are quite nice and nothing to sneer at.
I hope people understand that you are not 100% in equities.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by OkieIndexer » Tue Jan 16, 2018 10:48 am

The S&P 500 is up 4.7% so far this month including today, which is quite a bit but nothing compared to the +13.2% from January 1987. The first 11 trading days of Jan. '87 were already up +10% compared to +4.7% now. :shock: The month's only half over though.
Last edited by OkieIndexer on Tue Jan 16, 2018 10:49 am, edited 1 time in total.
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by bgf » Tue Jan 16, 2018 10:48 am

drg02b wrote:
Tue Jan 16, 2018 10:44 am
Every time I think the market is overvalued during the current run, I look at this graph:

https://www.ftportfolios.com/Common/Con ... 8ff9bfe12d

Then I realize we COULD only be halfway there and I keep reminding myself to keep investing.
exactly. and imagine what that would look like if they'd counted that like 19.8% or whatever it was drop in the past few years...
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Admiral » Tue Jan 16, 2018 10:54 am

Here's all you need to know (from the chart that was posted):

The average Bull Market period lasted 9.0 years with an average cumulative total return of 480%.

The average Bear Market period lasted 1.4 years with an average cumulative loss of -41%

Why would you assume that a big corporate tax cut would NOT send the markets flying higher? Seems pretty elemental to me. These co's are/have been sitting on a LOT of cash.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by cfs » Tue Jan 16, 2018 10:56 am

Well, USA have a long way to go before we can catch up a couple of global indexes.
-- 31904 - Hong Kong
-- 33282 - Argentina
-- 49458 - Mexico
-- 80097 - Brazil
Those are just numbers, just for the fun of it. Good luck, and thanks for reading ~cfs~
~ Member of the Active Retired Force since 2014 ~

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by OkieIndexer » Tue Jan 16, 2018 10:58 am

Januarys seem like they have a tendency to often be either really strong or really negative. Just 2 years ago Jan. 2016 was the worst January for the market since January 2009. They both ended up being good years for equities.
"In bull markets, people say 'The more risk I take, the greater my return.' But when people aren't afraid of risk, they'll accept risk without being compensated." -Howard Marks, Oaktree Capital

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Geologist » Tue Jan 16, 2018 10:59 am

The problem with facile explanations of changes is that they often don't fit the data. International Stocks are up more than US stocks. How does US corporate tax law changes explain that?

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Admiral » Tue Jan 16, 2018 11:04 am

Geologist wrote:
Tue Jan 16, 2018 10:59 am
The problem with facile explanations of changes is that they often don't fit the data. International Stocks are up more than US stocks. How does US corporate tax law changes explain that?
The OP didn't ask about intl stocks, and therefore my response did not address their rise.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by deltaneutral83 » Tue Jan 16, 2018 11:07 am

onourway wrote:
Tue Jan 16, 2018 9:54 am
I've read many times here that most of the market's big moves happen in just a handful of days every decade, but haven't been paying attention for long enough to actually witness it. Curious if we are now in one of those periods or if those really big days are typically even more extreme than this?
The markets moves are impossible to grab. BH's will post the articles that show that over the last 100+ years the big moves and the large majority of the returns happen in a ridiculously short amount of days compared to the fact that the market is open for roughly 250 days per year. The moves downward are even more intense, however the market is net rising so there are more of the up situations. If you had a crystal ball (which no one has, no matter how many Ivy league degrees) and were able to avoid the 20 worst days in the stock market the last 40 years you would have exponentially more money than you do. Same in reverse, if you missed say, the best 30 days, you'd have like half. Read's Taleb's Black Swan.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by flyingaway » Tue Jan 16, 2018 11:11 am

Admiral wrote:
Tue Jan 16, 2018 10:54 am
Here's all you need to know (from the chart that was posted):

The average Bull Market period lasted 9.0 years with an average cumulative total return of 480%.

The average Bear Market period lasted 1.4 years with an average cumulative loss of -41%

Why would you assume that a big corporate tax cut would NOT send the markets flying higher? Seems pretty elemental to me. These co's are/have been sitting on a LOT of cash.
Experts claimed that has been "priced in" in last year's run-up .

Geologist
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Geologist » Tue Jan 16, 2018 11:13 am

Admiral wrote:
Tue Jan 16, 2018 11:04 am
Geologist wrote:
Tue Jan 16, 2018 10:59 am
The problem with facile explanations of changes is that they often don't fit the data. International Stocks are up more than US stocks. How does US corporate tax law changes explain that?
The OP didn't ask about intl stocks, and therefore my response did not address their rise.
No, but you gave an explanation for the rise and I don't see any reason to believe it. Basically, it is impossible to demonstrate the reason for market rises over very short periods.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by OkieIndexer » Tue Jan 16, 2018 11:15 am

flyingaway wrote:
Tue Jan 16, 2018 11:11 am
Admiral wrote:
Tue Jan 16, 2018 10:54 am
Here's all you need to know (from the chart that was posted):

The average Bull Market period lasted 9.0 years with an average cumulative total return of 480%.

The average Bear Market period lasted 1.4 years with an average cumulative loss of -41%

Why would you assume that a big corporate tax cut would NOT send the markets flying higher? Seems pretty elemental to me. These co's are/have been sitting on a LOT of cash.
Experts claimed that has been "priced in" in last year's run-up .
Yeah, my thinking was the tax cut was already priced in last year even before it passed. My theory is the rise so far this month is mostly due to retail money (i.e. regular folks) flowing into equities (2018 IRA contributions, etc.).
"In bull markets, people say 'The more risk I take, the greater my return.' But when people aren't afraid of risk, they'll accept risk without being compensated." -Howard Marks, Oaktree Capital

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by SlowMovingInvestor » Tue Jan 16, 2018 11:17 am

flyingaway wrote:
Tue Jan 16, 2018 11:11 am
Admiral wrote:
Tue Jan 16, 2018 10:54 am
Here's all you need to know (from the chart that was posted):

The average Bull Market period lasted 9.0 years with an average cumulative total return of 480%.

The average Bear Market period lasted 1.4 years with an average cumulative loss of -41%

Why would you assume that a big corporate tax cut would NOT send the markets flying higher? Seems pretty elemental to me. These co's are/have been sitting on a LOT of cash.
Experts claimed that has been "priced in" in last year's run-up .
I don't claim to be an expert, but I would have figured it would be priced in by the end of last year (a few days after the tax bill had passed, and some of the key provisions became clear).

I do vaguely remember that in the tech bubble of 2000, the largest run up was before the crash.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by SlowMovingInvestor » Tue Jan 16, 2018 11:19 am

OkieIndexer wrote:
Tue Jan 16, 2018 11:15 am
flyingaway wrote:
Tue Jan 16, 2018 11:11 am
Admiral wrote:
Tue Jan 16, 2018 10:54 am
Here's all you need to know (from the chart that was posted):

The average Bull Market period lasted 9.0 years with an average cumulative total return of 480%.

The average Bear Market period lasted 1.4 years with an average cumulative loss of -41%

Why would you assume that a big corporate tax cut would NOT send the markets flying higher? Seems pretty elemental to me. These co's are/have been sitting on a LOT of cash.
Experts claimed that has been "priced in" in last year's run-up .
Yeah, my thinking was the tax cut was already priced in last year even before it passed. My theory is the rise so far this month is mostly due to retail money (i.e. regular folks) flowing into equities (2018 IRA contributions, etc.).
I'm wondering if another factor was that people were reluctant to buy MFs (and possibly take a capital gains distribution) in the last 2 weeks of the year, but waited until this year (and possibly lower tax rates).

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by MotoTrojan » Tue Jan 16, 2018 11:21 am

Helo80 wrote:
Tue Jan 16, 2018 9:57 am
onourway wrote:
Tue Jan 16, 2018 9:54 am
I've read many times here that most of the market's big moves happen in just a handful of days every decade, but haven't been paying attention for long enough to actually witness it.
There's an article floating around BH that addresses this issue... that bull runs and huge returns generally are limited to a few select weeks/months at random throughout a period of time while the rest of the months are ho-hum and/or loss of monies.
Excellent example of this covered in Random Walk Down Wallstreet. I can’t remenber exact figures but something like $1 in Dow in 1900 would be $290 now. If you missed the 5 best days of each year, it would be less than a penny. Having said that, if you missed the 5 worst days of each year instead.... but nobody can tell you when those will be consistently.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by AtlasShrugged? » Tue Jan 16, 2018 11:24 am

After a pattern continues long enough that the masses think it is the "New Norm".
Record ,Massive Inflows to an asset class.
Chasing Performance.
Greed.
This is more along the lines of what I was looking for, in a behavioral sense. For now, I am not seeing very many 'but this time, it is just so different' articles that would lead me to conclude people are buying into the idea of a 'New Norm'.

Would love to see other behavioral examples that Bogleheads look for.
“If you don't know, the thing to do is not to get scared, but to learn.”

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by delamer » Tue Jan 16, 2018 11:27 am

deltaneutral83 wrote:
Tue Jan 16, 2018 11:07 am
onourway wrote:
Tue Jan 16, 2018 9:54 am
I've read many times here that most of the market's big moves happen in just a handful of days every decade, but haven't been paying attention for long enough to actually witness it. Curious if we are now in one of those periods or if those really big days are typically even more extreme than this?
The markets moves are impossible to grab. BH's will post the articles that show that over the last 100+ years the big moves and the large majority of the returns happen in a ridiculously short amount of days compared to the fact that the market is open for roughly 250 days per year. The moves downward are even more intense, however the market is net rising so there are more of the up situations. If you had a crystal ball (which no one has, no matter how many Ivy league degrees) and were able to avoid the 20 worst days in the stock market the last 40 years you would have exponentially more money than you do. Same in reverse, if you missed say, the best 30 days, you'd have like half. Read's Taleb's Black Swan.
This is one of the problems with market timing — missing those relatively small number of days with a big runup.

http://www.businessinsider.com/cost-of- ... 500-2015-3

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by flyingaway » Tue Jan 16, 2018 11:29 am

OkieIndexer wrote:
Tue Jan 16, 2018 11:15 am
flyingaway wrote:
Tue Jan 16, 2018 11:11 am
Admiral wrote:
Tue Jan 16, 2018 10:54 am
Here's all you need to know (from the chart that was posted):

The average Bull Market period lasted 9.0 years with an average cumulative total return of 480%.

The average Bear Market period lasted 1.4 years with an average cumulative loss of -41%

Why would you assume that a big corporate tax cut would NOT send the markets flying higher? Seems pretty elemental to me. These co's are/have been sitting on a LOT of cash.
Experts claimed that has been "priced in" in last year's run-up .
Yeah, my thinking was the tax cut was already priced in last year even before it passed. My theory is the rise so far this month is mostly due to retail money (i.e. regular folks) flowing into equities (2018 IRA contributions, etc.).
It seems to me that the smart money was in last year, and the dumb money is rushing in now, which is the sign of topping.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Admiral » Tue Jan 16, 2018 11:31 am

Geologist wrote:
Tue Jan 16, 2018 11:13 am
Admiral wrote:
Tue Jan 16, 2018 11:04 am
Geologist wrote:
Tue Jan 16, 2018 10:59 am
The problem with facile explanations of changes is that they often don't fit the data. International Stocks are up more than US stocks. How does US corporate tax law changes explain that?
The OP didn't ask about intl stocks, and therefore my response did not address their rise.
No, but you gave an explanation for the rise and I don't see any reason to believe it. Basically, it is impossible to demonstrate the reason for market rises over very short periods.
How about irrational exuberance? I gave one possible explanation of the rise. I have no secret sauce, it's my opinion--and one that seems supported by the math--that companies with lower taxes immediately have increased revenues/earnings, which is thus reflected in rising share prices. Some of the rise may have been baked in last year, but some may not have been.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by deltaneutral83 » Tue Jan 16, 2018 11:35 am

delamer wrote:
Tue Jan 16, 2018 11:27 am
This is one of the problems with market timing — missing those relatively small number of days with a big runup.

http://www.businessinsider.com/cost-of- ... 500-2015-3
Thanks for posting, it was one of these articles that I read a few years ago that really hammered the point home (Taleb's book as well). Once you get to the point that you're more scared to sell (or stay on the sidelines) than you are to buy you know you've turned the corner and fought off the instinct to tinker. Being petrified that the day I sell any amount would follow up with the next day being one of the "10 best days" over a 30 year time frame is frightening (in a good way) and helped me to establish the stay the course motto.

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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by PFInterest » Tue Jan 16, 2018 11:41 am

JCE66 wrote:
Tue Jan 16, 2018 11:24 am
After a pattern continues long enough that the masses think it is the "New Norm".
Record ,Massive Inflows to an asset class.
Chasing Performance.
Greed.
This is more along the lines of what I was looking for, in a behavioral sense. For now, I am not seeing very many 'but this time, it is just so different' articles that would lead me to conclude people are buying into the idea of a 'New Norm'.

Would love to see other behavioral examples that Bogleheads look for.
bogleheads dont look for answers....it doesnt change the plan.

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Leif
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Leif » Tue Jan 16, 2018 11:42 am

Feels like a sugar high powered by tax cuts and a late bull (people finally deciding they don't want to any longer miss the bull market). That said it is exhilerating running with the bulls.
Last edited by Leif on Tue Jan 16, 2018 12:39 pm, edited 1 time in total.

WhiteMaxima
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by WhiteMaxima » Tue Jan 16, 2018 11:44 am

History shows if you miss the best couple of days, you miss the whole run.

bgf
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by bgf » Tue Jan 16, 2018 11:51 am

Geologist wrote:
Tue Jan 16, 2018 11:13 am
Admiral wrote:
Tue Jan 16, 2018 11:04 am
Geologist wrote:
Tue Jan 16, 2018 10:59 am
The problem with facile explanations of changes is that they often don't fit the data. International Stocks are up more than US stocks. How does US corporate tax law changes explain that?
The OP didn't ask about intl stocks, and therefore my response did not address their rise.
No, but you gave an explanation for the rise and I don't see any reason to believe it. Basically, it is impossible to demonstrate the reason for market rises over very short periods.
i think that is overly reductionist. efficient market hypothesis assumes new information is immediately digested by market actors. this is an over-idealized assumption, but there is no reason we cannot discern the cause of a large market move.

example, a biopharmaceutical just passes FDA approval, stock price surges 150%. was that just a random move? no, it was because it received FDA approval...

theoretically, the 'random' moves of the market appear so because they occur at prices met between equally knowledgeable buyers and sellers in the open market. this 'push and pull' between market buyers and sellers is why stock return data over short periods appears, to a certain extent, random.

when new information is introduced, the market adjusts accordingly. if the news is significant enough to cause a substantial change in market participants' expectations, then i see no reason why would could not find a causal link between the two.

this is not to say that i agree with market headlines that state nonsense like 'Dow down 0.3% on news that so and so shot whoever.'
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

Wakefield1
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Wakefield1 » Tue Jan 16, 2018 12:12 pm

Lets suppose I have good investments. If I were a market timer I would try to sell them while they are ridiculously overpriced. But not being a market timer if I just continue to hold them (and save or pocket the dividends),because they are good investments (I hope) they will continue to be worthwhile to hold after the prices come back down to reasonable valuation. Although the prices might fall below reasonable for a while before returning to reasonable.
Ridiculously overpriced? Don't really know.

Engineer250
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Engineer250 » Tue Jan 16, 2018 12:14 pm

JCE66 wrote:
Tue Jan 16, 2018 9:47 am
What I am looking for are behavioral signs. What specific behaviors do you observe that make that light bulb go off in your head?
2018 will be a big increase for me in retirement contributions. Therefore, I know it won’t be a down year because then I could be buying at a discount. I think other than flash crashes (which will happen the day after my buy orders go in each week) I don’t think we’ll have another downturn until 2020 when I have quite a bit more invested and it hurts from several years of good contributions.

Yes I cynically base my predictions on what would be less optimal for me. Or maybe there won’t be a crash, just stagnation starting now.
Where the tides of fortune take us, no man can know.

Wakefield1
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Wakefield1 » Tue Jan 16, 2018 12:14 pm

Market might not be efficient but it is more efficient than I or most investors trying to outguess it.

bikechuck
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by bikechuck » Tue Jan 16, 2018 12:20 pm

flyingaway wrote:
Tue Jan 16, 2018 11:11 am
Admiral wrote:
Tue Jan 16, 2018 10:54 am
Here's all you need to know (from the chart that was posted):

The average Bull Market period lasted 9.0 years with an average cumulative total return of 480%.

The average Bear Market period lasted 1.4 years with an average cumulative loss of -41%

Why would you assume that a big corporate tax cut would NOT send the markets flying higher? Seems pretty elemental to me. These co's are/have been sitting on a LOT of cash.
Experts claimed that has been "priced in" in last year's run-up .
The nice thing about experts is there are so many to choose from. Warren Buffet has gone on record as saying thed tax cuts are likely not priced in.

Nowizard
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by Nowizard » Tue Jan 16, 2018 12:23 pm

It makes no difference to me if the market is "ridiculously overpriced" since at another time it will be "ridiculously underpriced." Any angst is not related to the various shifts in the market but to the rational knowledge it will not occur but the emotional "wish" of always being able to retain the greatest gain. Settling for the long term, upward trend is boring but becomes gradually satisfying after a number of years. However, it does not change the fact that immediate reinforcement is preferable over longer term rewards. Gotta get that ice cream before it melts.

Tim

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WpgGuy
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by WpgGuy » Tue Jan 16, 2018 12:27 pm

JCE66 wrote:
Tue Jan 16, 2018 9:47 am
Bogleheads....I am struggling to recall a time where 'Mr. Market' moved like this in 12 days
Let me help, this (>=4% in 7 trading days) has happened 110 times since March 2009 [1]. There is nothing even remotely unique about this.

Stay the course.

[1] https://www.Washingtonpost.com/news/get ... ading-days

flyingaway
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Re: A 4% move in the Dow and S&P in 12 days? Seems odd

Post by flyingaway » Tue Jan 16, 2018 12:29 pm

Engineer250 wrote:
Tue Jan 16, 2018 12:14 pm
JCE66 wrote:
Tue Jan 16, 2018 9:47 am
What I am looking for are behavioral signs. What specific behaviors do you observe that make that light bulb go off in your head?
2018 will be a big increase for me in retirement contributions. Therefore, I know it won’t be a down year because then I could be buying at a discount. I think other than flash crashes (which will happen the day after my buy orders go in each week) I don’t think we’ll have another downturn until 2020 when I have quite a bit more invested and it hurts from several years of good contributions.

Yes I cynically base my predictions on what would be less optimal for me. Or maybe there won’t be a crash, just stagnation starting now.
With a 40% positive return by 2020, I am going to retire then, no more ONE MORE YEAR.

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