A 40% drop could hit by next year , FACT or FICTION?

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RIMDBogle
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A 40% drop could hit by next year , FACT or FICTION?

Post by RIMDBogle » Fri May 01, 2020 1:16 pm

A 40% drop could hit by next year , FACT or FICTION?
=============================================

Thanks for your replies to my threads. Here is an interesting piece, I like to share.



‘Don’t be fooled!’ A 40% drop could hit by next year after this bear-market rally fades, veteran economist warns


https://finance.yahoo.com/m/375879c0-08 ... drop.html

What do you think about this?

What is the strategy to protect from 40% drop ?

Thanks for sharing.

bluebirdy
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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by bluebirdy » Fri May 01, 2020 1:17 pm

Could? Sure. Could also be a 40% rise. Or 80%. No one knows.

ryman554
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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by ryman554 » Fri May 01, 2020 1:18 pm

RIMDBogle wrote:
Fri May 01, 2020 1:16 pm

What do you think about this?

I agree. I also agree with the statement that a 40% GAIN could hit next year.

Wow, how can both be true? What is one to do?

ScubaHogg
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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by ScubaHogg » Fri May 01, 2020 1:28 pm

“The only function of economic forecasting is to make astrology look respectable.”

John Kenneth Galbraith
“There is no problem so bad you can’t make it worse.” - Chris Hatfield, Astronaut mantra

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arcticpineapplecorp.
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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by arcticpineapplecorp. » Fri May 01, 2020 1:47 pm

well, how are we to say it's fact or fiction until it either happens or doesn't? Until then it's neither fact, nor fiction. It's just an opinion, which I guess is fiction until it becomes fact.

"could" is very strong conviction. I suppose we're supposed to scream and log onto our accounts and sell every stock and go to cash immediately based on this opinion?

If I did that every time someone exhibited an opinion I'd never invest at all, now would I?

There are so many ways in which this current crisis is not anything like the Great Depression, but let's say it takes 16 years to recover from this recent crisis...provided you still have a job (75% of the public still did even in the Great Depression, since unemployment was 25%, which means 75% employment but you're free to choose to look at the glass as half empty if you like) and you're far (that far or farther) from retirement and/or needing the money, what's the problem?

I have another 20 years to go til retirement. I have a job that's not recession proof but is recession resistent, since when a recession happens, my work gets busier and my job is more needed, not less.

this article is click bait, nothing more, nothing less.
Last edited by arcticpineapplecorp. on Fri May 01, 2020 1:49 pm, edited 1 time in total.
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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by magicrat » Fri May 01, 2020 1:48 pm

From Shilling's wikipedia page:

"Although cited frequently by various outlets as an expert, his accuracy has been called into question. According to reporting[9] by CBS News, Shilling's predictions were found to have a 38% accuracy rating, much worse than random chance, by an analysis[10] completed by CXO Advisory Group."

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by ruralavalon » Fri May 01, 2020 1:54 pm

When next year has arrived we will know of it is a fact or not. Until then it is just an opinion.
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Helo80
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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by Helo80 » Fri May 01, 2020 1:57 pm

RIMDBogle wrote:
Fri May 01, 2020 1:16 pm

https://finance.yahoo.com/m/375879c0-08 ... drop.html

What do you think about this?

What is the strategy to protect from 40% drop ?


I've been reading this since 2013....

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by Broken Man 1999 » Fri May 01, 2020 2:00 pm

Perhaps pigs could fly if they had wings!

Broken Man 1999
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BeneIRA
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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by BeneIRA » Fri May 01, 2020 2:01 pm

Helo80 wrote:
Fri May 01, 2020 1:57 pm
RIMDBogle wrote:
Fri May 01, 2020 1:16 pm

https://finance.yahoo.com/m/375879c0-08 ... drop.html

What do you think about this?

What is the strategy to protect from 40% drop ?


I've been reading this since 2013....
If they keep predicting it each year, one year it will be right then they can write a million "X WAS RIGHT!" articles. Sure, "X" may have been wrong for 49 years, but on that 50th year...they nailed it!

OP, if anyone knew for certain what would happen, they would not be writing articles about it, they wouldn't be advising other people about it, they would be putting all of their money on it, make millions/billions and disappear into the sunset. Every article is always "this could happen" which has about as much value as a $4 bill.
Last edited by BeneIRA on Fri May 01, 2020 2:04 pm, edited 1 time in total.

Katietsu
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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by Katietsu » Fri May 01, 2020 2:03 pm

I know this is the forum for nobody knows nothing. I agree that the market does not always seem to represent the economy, even in a forward thinking way. So it is difficult to know what the market will do.

I will say that I strongly believe that too much of this country expects business to return to near normal if the government just lets it. Unlike New Zealand and South Korea, we are apparently unwilling to stay at home until we get the virus down to traceable controllable levels. We are even unwilling to stay closed long enough to meet the CDC guidelines laid out by the Trump administration that fell far short of what was needed to reach a strong level of control. I do not know if it is a lack of scientific education, if it is denial for emotional reasons or if it media driven, but some responses are out of sync with reality. The death rate in my state is projected to be higher in August than April. While the headlines report that state X is loosening guidelines they do not report that even in those southern quick to loosen restrictions states, the guidelines ask those 60 and over or 65 and over to continue to stay at home.

I am now hearing the “this is just the flu” crowd starting back up citing that the current deaths attributed to coronavirus are in the same tier as the flu. Ignoring the fact that they are comparing annual flu deaths to two months of coronavirus deaths, the coronavirus death rate has been achieved only through an unprecedented shut down and great sacrifices. Wonder what the death rate from flu has been in March and April?

OK. Done with my rant. Bottom line is ...when more people start to realize that we have not shut down long enough and thoroughly enough to achieve control that allows for future outbreaks to be minimal, will the stock market stay at 2018 levels? How much influence with the fed actions have vs watching baseball players isolated in Arizona playing in empty stadiums?
Last edited by Katietsu on Fri May 01, 2020 2:15 pm, edited 1 time in total.

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by csmath » Fri May 01, 2020 2:04 pm

ruralavalon wrote:
Fri May 01, 2020 1:54 pm
When next year has arrived we will know of it is a fact or not. Until then it is just an opinion.
I know what you are getting at but actually the future doesn't matter as to whether the statement is true. Even if it turns out the not happen, it is 100% true. It "could" happen. But, as others have stated, a 40% gain could also happen.

I think the question itself is a waste of time. Like asking, is it true that I could get in a car accident this year? Umm... sure. We get nowhere with it.

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by lws6772 » Fri May 01, 2020 2:05 pm

Yes, that's true there could be a 40% drop next year, and the year after that and the year after that, and the year after that.... And it's fiction until it happens and no one I know can tell you when that will be, which is a fact. :D

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by anon_investor » Fri May 01, 2020 2:05 pm

Nobody knows nothing!

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by sailaway » Fri May 01, 2020 2:06 pm

Hypothetical, which is neither fact nor fiction.

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by Dottie57 » Fri May 01, 2020 2:08 pm

It always possible to drop 40%. The possibility is fact. Will it indeed happen - my magic 8 ball is not working.

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by midareff » Fri May 01, 2020 2:08 pm

I think there is merit to that thought pattern. I look around when we or I have to go out for a medical appointment and businesses are closed, and have been for too many weeks, hotels closed, airlines, cruises, retail, malls, movies, lines to get into socially distanced groceries, begging car dealers, massive unemployment not expected to vanish quickly.... many things just not being bought and that means municipal governments are not getting their sales tax revenue and have little expectation of full property tax collections. Mortgage and credit card companies should experience pains as well..... and the Shiller is at 26.48 this AM.... REALLY?

To confess, I'm a conservative type guy.... never let expenses get past what I could pay with SS and my pension and used to portfolio to float lots of high end travel, 4 to 6 times a year. .. that's dead now. If I was thirty and working I would relish a 40% drop.. buy more shares for the same dollars, but I'm 72 and want to enjoy the bounty of my work. A decade and a half of draw in safe money and plainly, I want my life back. If equities drop 40% new and resale housing should be crippled.. guess I may have to think of renting this out and buying something bigger/nicer. One man's poison is another's treat.

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by 02nz » Fri May 01, 2020 2:09 pm

A 40% drop could hit next week. (Head explodes.)

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by PDX_Traveler » Fri May 01, 2020 2:10 pm

RIMDBogle wrote:
Fri May 01, 2020 1:16 pm
A 40% drop could hit by next year , FACT or FICTION?
=============================================

What is the strategy to protect from 40% drop ?

Thanks for sharing.
To address your question - I think you already know a number of strategies to 'protect' from a 40% drop. Keep money you absolutely need in the next 1-, 3-, or 5-year (or you pick) time frame in safe investments, and keep the rest in broadly diversified stock + bond investments ...

But, to answer the question you are likely asking - how to protect from a 40% drop that "could" occur - no one can know. So strategies along the lines of the above would do just as well, no?

fwellimort
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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by fwellimort » Fri May 01, 2020 2:10 pm

With the route FED is going nowadays, I am starting to doubt it.

If this was back in the 20th century of US, our stock market would have literally crashed by now.
But with J Powell and his good old printer, who knows.

The government has pretty much (indirectly) guaranteed that the stock market will not crash under the current system.
This just means going forward, companies are going to take more and more risks through leveraging (cause low interest rates) creating an even bigger bubble which cannot be popped.

Government since 2008 has been endorsing continuously the concept of 'too big to fail' (delay the growing problem as long as possible).
Honestly, this is looking like the housing crisis in 2008. The government makes buying houses too cheap for everyone and next thing you know, everyones borrowing to get as many houses as possible.

Who knows if this house of cards with the stock market would crash or not.
Everyday is a new journey with the US. Maybe the next innovation of the stock market growth is in 'leverages'. Maybe 'leverage' is the new vehicle that drives historic stock market returns because real growth is projected to be much lower.

The financial market amazes me everyday. It's like a ponzi scheme backed by the government which means... it's not a ponzi scheme for all real intent and purposes?
I'm not sure but the side effects of all this would only mean growing wealth inequality. I'm sure there's going to be some fixes on that later on leading to some mild inflation (because if everyday people get more money => more money available for spending => price of goods go up). And to counteract such, FED should raise interest rates but that's not realistically possible with majority of nations around the globe being dependent on low interest rates. The US interest rate is literally carrying the burden of the rest of the world so who knows.

Anyways, nobody really knows anything. Maybe some do through insider trading but at least not the general public (and most bogleheaders including me).

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by David Jay » Fri May 01, 2020 2:11 pm

RIMDBogle wrote:
Fri May 01, 2020 1:16 pm
What is the strategy to protect from 40% drop ?
I will respond to this question - The strategy to protect one’s portfolio in ALL future drops is to hold an asset allocation that one can hold through thick-and-thin.

If you have a portfolio today that you will dump if there is a future 40% downturn then you need to adjust your asset allocation now, in advance of the downturn.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by JoMoney » Fri May 01, 2020 2:16 pm

Interest rates on long-term treasuries would have to jump +4% before they would drop anywhere near that much...
If you're not willing to take that risk, hold cash or shorter-term bonds.
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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by Stinky » Fri May 01, 2020 2:17 pm

This headline could be written in 2021. Or 2022. Or 2023. Or any year with four digits.

You get the picture.
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nix4me
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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by nix4me » Fri May 01, 2020 2:24 pm

I heard is was fact. Then I read somewhere that it was fiction.

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by rockthisworld » Fri May 01, 2020 2:45 pm

Probably will go down 40% from where we are and then rally or we could go up another 20-30% and then see a 50% drop or just a 30%

I wouldn’t use short term investment performance to justify a long term plan.

I know I can be pessimistic however I am 29 and I throw money right into VTSAX because I know long term there is a good chance of making money.

Even only making alittle it would be more than a savings account or CD.

If we are talking predictions I think this summer it drops at some point to bottom sp500 to 1776 ( poetic because America lol ) and then it rebounds from there.

Either way the bottom could have already happened after the sell off but history tells you how to test those lows but we don’t know when it could happen in a year or two before rebounding.

Keep to your strategy :)

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by sd323232 » Fri May 01, 2020 2:58 pm

i would say fact, this is not over yet.

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by dboeger1 » Fri May 01, 2020 3:16 pm

Stinky wrote:
Fri May 01, 2020 2:17 pm
This headline could be written in 2021. Or 2022. Or 2023. Or any year with four digits.

You get the picture.
So the year 10000 will finally be different? :D

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by arcticpineapplecorp. » Fri May 01, 2020 3:44 pm

"It's true. I read it somewhere. Alright I wrote it down and then I read it. I believe everything I read." -- Bob Saget
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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by Blogian » Fri May 01, 2020 4:00 pm

The problem is that unlike weather, where a prediction does not change the outcome, any (public) prediction on stocks alters its outcome. Everyone may read that article and believe it, then they would sell right away, and the market would drop 40% instantly. Or maybe everyone that read it wanted to be a contrarian and buy instead, sending stocks up. Everyone could also ignore it altogether and not react on it. The act of posting this question here has affected the outcome of stocks next year.

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by ImmatureOldGuy » Fri May 01, 2020 4:01 pm

[Noob] here. Stay the course. Stick to your plan. Then realize the market has been on an eleven year tear, coronavirus is a reality and that we are looking at about 17% unemployment. Market timing is bad, unless you are paying attention.
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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by rustymutt » Fri May 01, 2020 4:37 pm

Let me just say this. Everyone should have some cash, and I'd be putting more than normal on sidelines right now. I want to make sure if the market does go down, I'm not horrified at pulling out resources. From where I sit, could seem more likely to go down over the next year, thanks to the virus wrecking havoc on us. Why settle on 40%? Could be down 60%. Risk management is very personal.
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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by CyclingDuo » Fri May 01, 2020 4:53 pm

RIMDBogle wrote:
Fri May 01, 2020 1:16 pm
A 40% drop could hit by next year , FACT or FICTION?
=============================================

Thanks for your replies to my threads. Here is an interesting piece, I like to share.



‘Don’t be fooled!’ A 40% drop could hit by next year after this bear-market rally fades, veteran economist warns


https://finance.yahoo.com/m/375879c0-08 ... drop.html

What do you think about this?

What is the strategy to protect from 40% drop ?

Thanks for sharing.
A. Gary Shilling is the guy making the call? Now that's funny. I looked up his track record...

"Although cited frequently by various outlets as an expert, his accuracy has been called into question. According to reporting by CBS News, Shilling's predictions were found to have a 38% accuracy rating, much worse than random chance, by an analysis completed by CXO Advisory Group."

https://www.cbsnews.com/news/who-are-th ... ock-gurus/
https://www.cxoadvisory.com/gurus/

I'll stick with random chance. :beer

Even Jim Cramer scores higher than Shilling. Now that's saying something...
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by index245 » Fri May 01, 2020 5:04 pm

Definitely think it could happen but I'm starting to have doubts. Currently our government (Treasury department/white house, congress, the FED) has a policy of socializing losses of public companies and essentially putting a "floor" on stock market drops. This happened in 2008 and 2020. This is an observation and not a critique, per say. Does this put a ceiling on future growth / gains as well? No idea, but something I've been considering.

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Re: A 40% drop could hit by next year , FACT or FICTION?

Post by LadyGeek » Fri May 01, 2020 6:47 pm

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