U.S. stocks in freefall

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fortyofforty
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Re: U.S. stocks in freefall

Postby fortyofforty » Wed Jan 06, 2016 9:39 pm

I always hope for a down day when I buy equities, and an up day if I have to sell. I do have a portfolio of equities that takes a hit when the stock market drops, but I've lived through enough calamitous periods not to become overly concerned with normal market corrections. I do believe the markets will come back a bit tomorrow, so I think I missed the current dip, which will lead me to continue my plan to purchase at regular intervals, markets up and markets down. Sorry if my earlier comments came off as wishing ill for the portfolios of others; rest assured I'm in the same boat, nearing retirement and holding equities, while looking for small bright spots.
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BahamaMan
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Re: U.S. stocks in freefall

Postby BahamaMan » Thu Jan 07, 2016 8:38 am

fortyofforty wrote:I do believe the markets will come back a bit tomorrow, so I think I missed the current dip, which will lead me to continue my plan to purchase at regular intervals, markets up and markets down.


Good News for You ! ---- Should be another Down Day!

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VictoriaF
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Re: U.S. stocks in freefall

Postby VictoriaF » Thu Jan 07, 2016 8:45 am

If stocks are in freefall in China, on the other side of the globe, is not it equivalent to freerise on this side of the globe?

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Tanelorn
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Re: U.S. stocks in freefall

Postby Tanelorn » Thu Jan 07, 2016 9:06 am

"Free to fall" definitely hasn't described the Chinese stock market for the last two days. They closed it at -7%, forbidding further trading for the day.

viewtopic.php?f=10&t=168929&p=2748093#p2748041

tj218
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Re: U.S. stocks in freefall

Postby tj218 » Thu Jan 07, 2016 9:44 am

So I broke. I am seeing a lot of things I don't like in the market (not news articles). For the first time in my 12 years of investing as a Boglehead, I switched 90% out of Target Retirement 2045 and went to a Total Bond Index at least for the next 30 days. The 2007-2008 downturn didn't phase me a bit, but I'd rather avoid a big correction in my portfolio this time.

I could be wrong, but at least I won't lose money.

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Re: U.S. stocks in freefall

Postby goodenyou » Thu Jan 07, 2016 9:52 am

"The stock market will fluctuate".
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InvestorNewb
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Re: U.S. stocks in freefall

Postby InvestorNewb » Thu Jan 07, 2016 9:53 am

Can the US halt trading like China has done?
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)

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Re: U.S. stocks in freefall

Postby carofe » Thu Jan 07, 2016 9:55 am

It is going to be an interesting year. We are going to see how the stock market is going to look like with the new regulations after 2008.
I'm in the accumulation phase, so I think I'm going to be very pleased with my monthly contribution to my 401k this year with this 10% to 20% discount we may see 8-).
US Total Stock Market + Intermediate Term Bond. That's it.

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Toons
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Re: U.S. stocks in freefall

Postby Toons » Thu Jan 07, 2016 9:55 am

Yawn :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

hexagon
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Re: U.S. stocks in freefall

Postby hexagon » Thu Jan 07, 2016 9:59 am

tj218 wrote:So I broke. I am seeing a lot of things I don't like in the market (not news articles). For the first time in my 12 years of investing as a Boglehead, I switched 90% out of Target Retirement 2045 and went to a Total Bond Index at least for the next 30 days. The 2007-2008 downturn didn't phase me a bit, but I'd rather avoid a big correction in my portfolio this time.

I could be wrong, but at least I won't lose money.


One of the main things I've gotten from bogleheads is not to trust my feelings about where the market is heading.

Let me second ray.james recommendation from the previous page of this thread:

ray.james wrote:I go back and read this awesome post by Nisi on days like this...

http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939

Tanelorn
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Re: U.S. stocks in freefall

Postby Tanelorn » Thu Jan 07, 2016 10:07 am

InvestorNewb wrote:Can the US halt trading like China has done?

Yes, if you read the articles in the thread I linked above, you'll see the details. Basically, the US markets will stop trading for a while (minutes, hours, rest of the day) depending on how big the drop it. But the Chinese market is a lot more volatile and their thresholds are a lot more likely to be hit, relatively speaking, because they aren't as large compared to their market volatility.

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Re: U.S. stocks in freefall

Postby Dieharder » Thu Jan 07, 2016 10:10 am

tj218 wrote:So I broke. I am seeing a lot of things I don't like in the market (not news articles). For the first time in my 12 years of investing as a Boglehead, I switched 90% out of Target Retirement 2045 and went to a Total Bond Index at least for the next 30 days. The 2007-2008 downturn didn't phase me a bit, but I'd rather avoid a big correction in my portfolio this time.

I could be wrong, but at least I won't lose money.


Really? The U.S financial system on the brink of complete failure did not worry you in 2008? But the Chinese economic failire is more worysome?

I too held through 2008 crisis, but boy it was scary, not because of the money we were all losing, but staring at the possibility of complete system meltdown. Just think about all the companies that went under and billions of dollars in credit that went under. We were very lucky to have come out of it at that time.

Every crisis is unique and has it's share of worries, this is why there is a risk premium for investing in equities. There is no risk in investing around normal market conditions, anyone can handle small fluctuations, it is those large and uncertain movements that brings in the premium.

I do not welcome bear markets unlike some here who is cheering the possibility to buy low, I am not that brave, I may even say it is foolish since there are no guarantees of recovery from any crisis. That said, I do not sell in bear markets, no matter what happens. When I get closer to my goal, I will keep my AA down to a level where I can sleep well at night, knowing I may need to start drawing money from my accounts and I cannot afford to lose it. Not now.

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Re: U.S. stocks in freefall

Postby S&L1940 » Thu Jan 07, 2016 10:15 am

hexagon wrote:
tj218 wrote:So I broke. I am seeing a lot of things I don't like in the market (not news articles). For the first time in my 12 years of investing as a Boglehead, I switched 90% out of Target Retirement 2045 and went to a Total Bond Index at least for the next 30 days. The 2007-2008 downturn didn't phase me a bit, but I'd rather avoid a big correction in my portfolio this time.

I could be wrong, but at least I won't lose money.


One of the main things I've gotten from bogleheads is not to trust my feelings about where the market is heading.

Let me second ray.james recommendation from the previous page of this thread:

ray.james wrote:I go back and read this awesome post by Nisi on days like this...

http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939


Yes, that is an "awesome post"
Simply shows the value of the Boglehead universe
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tj218
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Re: U.S. stocks in freefall

Postby tj218 » Thu Jan 07, 2016 10:26 am

Thanks for the beat-up/encouragement to stay the course. It's too late now though :) I have not made any changes to my regular (bi-weekly) contributions to Target 2045, just my overall allocation in stocks was too high for comfort for me.

I don't plan on being long on bonds, and I imagine I will get back into 2045 at some point in the not-so distant future. I look forward to correction and downturn and view it as a buying opportunity. I'd just rather keep the balance of my value as-is while it goes down.

carofe
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Re: U.S. stocks in freefall

Postby carofe » Thu Jan 07, 2016 10:38 am

ray.james wrote:I go back and read this awesome post by Nisi on days like this...

http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939


Excellent post.

Image

This image opened my eyes a while ago (I would add to the RECESSION "debt default and bankruptcy for those that borrowed too much to grow"). The supply grows faster than the demand until there is more than it is demanded, then we have a "slow down" and then a recession. The recession even causes the demand to slow down too (people loosing their jobs). After the adjustment the cycles starts over again. This cycles is totally normal and human, and can have different length depending on the gov't interventions to save the boat or the nature of the beast. I think, that's what's happening now, being China the one affected the most. It doesn't matter what gov't or the dictator from China do, we are headed to a correction. How deep? for how long? who will survive? who knows. It was obvious even at the beginning of last year.

I always thought:
1) If we never recovered to previous levels but the economy still continues, then most likely the inflation will go down too so at least I'll be able to use the money.
2) If it is a pretty bad crash, I mean, like an energy crisis, the least of my worries would be my 401k :|.
US Total Stock Market + Intermediate Term Bond. That's it.

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cfs
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Re: U.S. stocks in freefall

Postby cfs » Thu Jan 07, 2016 10:43 am

Finishers wanted!

Follow the fundamentals . . . "The fundamentals of the economy are sound" . . . Now, really, this is a good time to invest if you have LONG time horizon. Remember to invest slowly and for the long run. See you on the finish line.

Finishers wanted!

Have a productive day in the US Markets.
~Alumnus, Retirement Class of 2014 || Black Swan Ready Portfolio with a 0% spending rate~

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Yesterdaysnews
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Re: U.S. stocks in freefall

Postby Yesterdaysnews » Thu Jan 07, 2016 10:48 am

This is when the weak hands start to bail out. Best thing to do is do nothing, or if you have some decent free cash flow to buy more. Be a strong hand.

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Re: U.S. stocks in freefall

Postby BogleBoogie » Thu Jan 07, 2016 10:49 am

tj218 wrote:Thanks for the beat-up/encouragement to stay the course. It's too late now though :) I have not made any changes to my regular (bi-weekly) contributions to Target 2045, just my overall allocation in stocks was too high for comfort for me.

I don't plan on being long on bonds, and I imagine I will get back into 2045 at some point in the not-so distant future. I look forward to correction and downturn and view it as a buying opportunity. I'd just rather keep the balance of my value as-is while it goes down.


Buy your target date find, hold it and stop watching market fluctuations.

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Re: U.S. stocks in freefall

Postby Leeraar » Thu Jan 07, 2016 11:06 am

I don't plan on being long on bonds, and I imagine I will get back into 2045 at some point in the not-so distant future.


Your fund company's frequent trading policies may keep you out of this investment much longer than you might like.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

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Re: U.S. stocks in freefall

Postby TheTimeLord » Thu Jan 07, 2016 11:12 am

InvestorNewb wrote:Can the US halt trading like China has done?

https://personal.vanguard.com/us/conten ... ersJSP.jsp [link fixed by admin LadyGeek]
Market volatility regulations
Circuit breakers


Circuit-breaker points represent the thresholds at which trading is halted market-wide for single-day declines in the S&P 500 Index. Circuit breakers halt trading on the nation's stock markets during dramatic drops and are set at 7%, 13%, and 20% of the closing price for the previous day. The circuit breakers are calculated daily.

Level 1 halt (7%)

Trading will halt for 15 minutes if drop occurs before 3:25 p.m.
At or after 3:25 p.m.—trading shall continue, unless there is a Level 3 halt.

Level 2 halt (13%)

Trading will halt for 15 minutes if drop occurs before 3:25 p.m.
At or after 3:25 p.m.—trading shall continue, unless there is a Level 3 halt.

Level 3 halt (20%)

At any time during the trading day—trading shall halt for the remainder of the trading day.

Single stock price bands
The SEC implemented a new marketplace rule, known as the Limit Up-Limit Down Rule, designed to prevent trades from executing outside of price bands established throughout the day for individual stocks and exchange-traded funds (ETFs).
Run, You Clever Boy!

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TheTimeLord
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Re: U.S. stocks in freefall

Postby TheTimeLord » Thu Jan 07, 2016 11:12 am

TheTimeLord wrote:
InvestorNewb wrote:Can the US halt trading like China has done?
https://personal.vanguard.com/us/content/Funds/FundsToolsCircuitBreakersJSP.jsp
Market volatility regulations
Circuit breakers


Circuit-breaker points represent the thresholds at which trading is halted market-wide for single-day declines in the S&P 500 Index. Circuit breakers halt trading on the nation's stock markets during dramatic drops and are set at 7%, 13%, and 20% of the closing price for the previous day. The circuit breakers are calculated daily.

Level 1 halt (7%)

Trading will halt for 15 minutes if drop occurs before 3:25 p.m.
At or after 3:25 p.m.—trading shall continue, unless there is a Level 3 halt.

Level 2 halt (13%)

Trading will halt for 15 minutes if drop occurs before 3:25 p.m.
At or after 3:25 p.m.—trading shall continue, unless there is a Level 3 halt.

Level 3 halt (20%)

At any time during the trading day—trading shall halt for the remainder of the trading day.

Single stock price bands
The SEC implemented a new marketplace rule, known as the Limit Up-Limit Down Rule, designed to prevent trades from executing outside of price bands established throughout the day for individual stocks and exchange-traded funds (ETFs).
Run, You Clever Boy!

jay22
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Re: U.S. stocks in freefall

Postby jay22 » Thu Jan 07, 2016 11:40 am

I cannot understand why so many experienced investors freak out when the market drops 2-3% every now and then. I mean, that is indeed the nature of the market, isn't it? It is not the first time it has happened, nor would it be the last.

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Re: U.S. stocks in freefall

Postby dbCooperAir » Thu Jan 07, 2016 11:54 am

I'm going to take $4 of dividends and take my chances :wink:

http://abcnews.go.com/US/winner-powerball-lottery-jackpot-now-estimated-700-million/story?id=36137791
No Winner in Powerball Lottery, Jackpot Now Estimated $700 Million
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Re: U.S. stocks in freefall

Postby surfstar » Thu Jan 07, 2016 12:03 pm

tj218 wrote:So I broke. I am seeing a lot of things I don't like in the market (not news articles). For the first time in my 12 years of investing as a Boglehead, I switched 90% out of Target Retirement 2045 and went to a Total Bond Index at least for the next 30 days. The 2007-2008 downturn didn't phase me a bit, but I'd rather avoid a big correction in my portfolio this time.

I could be wrong, but at least I won't lose money.


But you lost money because you sold!

12 years of BH and you don't know that you can't time the market.
Best of luck, but please let us know how it turns out for you (when you get back in, etc).

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Re: U.S. stocks in freefall

Postby Tanelorn » Thu Jan 07, 2016 12:05 pm

Leeraar wrote:
I don't plan on being long on bonds, and I imagine I will get back into 2045 at some point in the not-so distant future.


Your fund company's frequent trading policies may keep you out of this investment much longer than you might like.

There's always the 2040 fund instead, if you can stomach the extra 1% in bonds instead of stocks.

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Re: U.S. stocks in freefall

Postby cfs » Thu Jan 07, 2016 12:50 pm

Why Bonds?

Time to ask the same ole question. Where have all the Why Bonds and 100% Equities conversations gone?

Invest slowly and for the long run.
~Alumnus, Retirement Class of 2014 || Black Swan Ready Portfolio with a 0% spending rate~

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Re: U.S. stocks in freefall

Postby tj218 » Thu Jan 07, 2016 1:49 pm

jay22 wrote:I cannot understand why so many experienced investors freak out when the market drops 2-3% every now and then. I mean, that is indeed the nature of the market, isn't it? It is not the first time it has happened, nor would it be the last.


It's not a 2-3% drop that scares me. I've been growing more and more concerned about some underlying stuff (valuation, geopolitical, commodities, etc.) for a while.

Now China probably caused me to over-react and go too far into bonds this time, but I'd rather be 90% bonds than 94% stocks given what I have been seeing.

In reality I am nobody, I can't outsmart the market, I know that. I know I am much more likely to be wrong than to be right. However, if I lose the next 30 days of stock market gains, over the next 30 years it won't be a big deal. If I were to lose the next 30 days of stock market losses (2008 level), it could make a deal. So why risk the loss with the turmoil and from my perspective warning signs? Call this my circuit breaker/insurance policy. I will re-asses back in a month if I see some of my concerns easing than I will move back.

I am rooting for a correction as my buying power goes up, especially if most of my nest egg can be used to take advantage. As opposed to riding it down and trying to get back to 1/6/2016 levels. If the market does drop I also know that I will never know where bottom is, and will make a move back in with full knowledge I can get cut and still take some losses.

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Re: U.S. stocks in freefall

Postby Leeraar » Thu Jan 07, 2016 1:56 pm

I dunno. How soon we forget.

Two days ago the market dropped because of the North Korean H-bomb. Today, it's always been because of uncertainties about China.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

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Re: U.S. stocks in freefall

Postby Theoretical » Thu Jan 07, 2016 1:59 pm

tj218 wrote:
jay22 wrote:I cannot understand why so many experienced investors freak out when the market drops 2-3% every now and then. I mean, that is indeed the nature of the market, isn't it? It is not the first time it has happened, nor would it be the last.


It's not a 2-3% drop that scares me. I've been growing more and more concerned about some underlying stuff (valuation, geopolitical, commodities, etc.) for a while.

Now China probably caused me to over-react and go too far into bonds this time, but I'd rather be 90% bonds than 94% stocks given what I have been seeing.

In reality I am nobody, I can't outsmart the market, I know that. I know I am much more likely to be wrong than to be right. However, if I lose the next 30 days of stock market gains, over the next 30 years it won't be a big deal. If I were to lose the next 30 days of stock market losses (2008 level), it could make a deal. So why risk the loss with the turmoil and from my perspective warning signs? Call this my circuit breaker/insurance policy. I will re-asses back in a month if I see some of my concerns easing than I will move back.

I am rooting for a correction as my buying power goes up, especially if most of my nest egg can be used to take advantage. As opposed to riding it down and trying to get back to 1/6/2016 levels. If the market does drop I also know that I will never know where bottom is, and will make a move back in with full knowledge I can get cut and still take some losses.


Something I don't understand is why you would have an aggressive Target fund and then go 100% bonds. Why not hedge your bets if your risk tolerance is lower than the target fund? For example, replace 10-20% or even 25-35% with bonds.

Changing asset allocations during high volatility is a way to end up with a smaller pie even if you are right. Even Bogle's big change was not 100% out of equities but still 30ish.

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Re: U.S. stocks in freefall

Postby Hunky-dory » Thu Jan 07, 2016 2:05 pm

tj218 wrote:
It's not a 2-3% drop that scares me. I've been growing more and more concerned about some underlying stuff (valuation, geopolitical, commodities, etc.) for a while.


Instead of doing what you have described, please consider revisiting your asset allocation in the first place and picking an allocation where you are comfortable with a 50% or more drop in equities. The behavior you are describing is likely to result in you having less money come retirement time over the long run.

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Re: U.S. stocks in freefall

Postby Leeraar » Thu Jan 07, 2016 2:15 pm

Piling on:

1. Change your asset allocation in response to life events, if needed.

2. Never change your AA in response to market events.

If 2. does not apply, you have the wrong AA.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

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Re: U.S. stocks in freefall

Postby HomerJ » Thu Jan 07, 2016 2:20 pm

tj218 wrote:Thanks for the beat-up/encouragement to stay the course. It's too late now though :) I have not made any changes to my regular (bi-weekly) contributions to Target 2045, just my overall allocation in stocks was too high for comfort for me.

I don't plan on being long on bonds, and I imagine I will get back into 2045 at some point in the not-so distant future. I look forward to correction and downturn and view it as a buying opportunity. I'd just rather keep the balance of my value as-is while it goes down.


What happens if it turns up tomorrow? What if you never get that buying opportunity?

Will you jump back in right away? Or wait to see if maybe it starts dropping again? What if you wait and it keeps going up? One month later, it might be back up 10%... Then what? Then it will be okay to jump back in? What if it drops again right after you jump back in?

Or what if does keep dropping? When do you take advantage of the buying opportunity? After it drops 5%? 10%? What if you choose 10%, and it stops dropping at 9%? What if you choose 10%, buy back in and it continues to drop 50%?

So many things can happen. You'll drive yourself crazy trying to predict the future.

If you are young, you should pick an AA that you can live with even if the market drops 50% tomorrow, and takes 10 years to recover.
If you are near retirement, you should pick an AA that you can live with even if the market drops 50% tomorrow, and never comes back.

That's how you choose how much you have in bonds... Not based on how you "read the market".

Seriously, we just had a 10% drop in August/September, right? Then it bounced back. What's different 4 months later that THIS time, you need to go all bonds?

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Re: U.S. stocks in freefall

Postby HomerJ » Thu Jan 07, 2016 2:21 pm

Leeraar wrote:Piling on:

1. Change your asset allocation in response to life events, if needed.

2. Never change your AA in response to market events.

If 2. does not apply, you have the wrong AA.

L.


Excellent post.

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Re: U.S. stocks in freefall

Postby oldzey » Thu Jan 07, 2016 2:25 pm

Back up the truck - cat food is on sale. :beer
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

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Re: U.S. stocks in freefall

Postby packet » Thu Jan 07, 2016 2:31 pm

Theoretical wrote:...Even Bogle's big change was not 100% out of equities but still 30ish.

And due to life circumstances, not market conditions/predictions... if I recall correctly.

:beerCheers,
packet
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dbCooperAir
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Re: U.S. stocks in freefall

Postby dbCooperAir » Thu Jan 07, 2016 2:36 pm

oldzey wrote:Back up the truck - cat food is on sale. :beer


Even the good wet stuff or just the dry :wink:
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-

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Re: U.S. stocks in freefall

Postby carofe » Thu Jan 07, 2016 2:39 pm

HomerJ wrote:
tj218 wrote:Thanks for the beat-up/encouragement to stay the course. It's too late now though :) I have not made any changes to my regular (bi-weekly) contributions to Target 2045, just my overall allocation in stocks was too high for comfort for me.

I don't plan on being long on bonds, and I imagine I will get back into 2045 at some point in the not-so distant future. I look forward to correction and downturn and view it as a buying opportunity. I'd just rather keep the balance of my value as-is while it goes down.


What happens if it turns up tomorrow? What if you never get that buying opportunity?

Will you jump back in right away? Or wait to see if maybe it starts dropping again? What if you wait and it keeps going up? One month later, it might be back up 10%... Then what? Then it will be okay to jump back in? What if it drops again right after you jump back in?

Or what if does keep dropping? When do you take advantage of the buying opportunity? After it drops 5%? 10%? What if you choose 10%, and it stops dropping at 9%? What if you choose 10%, buy back in and it continues to drop 50%?

So many things can happen. You'll drive yourself crazy trying to predict the future.

If you are young, you should pick an AA that you can live with even if the market drops 50% tomorrow, and takes 10 years to recover.
If you are near retirement, you should pick an AA that you can live with even if the market drops 50% tomorrow, and never comes back.

That's how you choose how much you have in bonds... Not based on how you "read the market".

Seriously, we just had a 10% drop in August/September, right? Then it bounced back. What's different 4 months later that THIS time, you need to go all bonds?


I don't think he is afraid of the ups and downs of the market. I think he is afraid of the "underlying" economy state that has been happening in the last couple of years.

The problem is that there are enough research results saying that strategy he is doing is very likely to fail. I agree with most people here. I think tj218 should take the money out of the Target Date 2045 and do his own AA according to his risk tolerance (80/20 or even 70/30). And on the mean time, read some more good books to calm down those fears :D.
For instance:
http://www.vanguard.com/pdf/s700.pdf, and here http://vanguard.com/pdf/ISGVEMO.pdf, and then here: http://www.amazon.com/All-About-Asset-A ... allocation

I think for investing success you need to have a deep understanding of the dynamic of long-term investing, its risk and rewards and all that, and a good emergency fund.
US Total Stock Market + Intermediate Term Bond. That's it.

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packet
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Re: U.S. stocks in freefall

Postby packet » Thu Jan 07, 2016 2:40 pm

Yummm! ----->

oldzey wrote:Back up the truck - cat food is on sale. :beer

dbCooperAir wrote:Even the good wet stuff or just the dry :wink:


:beerCheers,
packet
First round’s on me.

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Re: U.S. stocks in freefall

Postby dbCooperAir » Thu Jan 07, 2016 2:43 pm

Remember to follow your plan!
Image
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-

scsiguru
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Re: U.S. stocks in freefall

Postby scsiguru » Thu Jan 07, 2016 2:47 pm

Maybe I'm better off taking my 2% guaranteed return...remember THERE IS NO INFLATION. :P

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oldzey
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Re: U.S. stocks in freefall

Postby oldzey » Thu Jan 07, 2016 3:22 pm

This thread really needs a soundtrack for full effect.
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

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VictoriaF
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Re: U.S. stocks in freefall

Postby VictoriaF » Thu Jan 07, 2016 3:22 pm

I have figured it out. Forget China. Forget N. Korea. People are selling stocks to get cash in order to play lottery!

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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Re: U.S. stocks in freefall

Postby cfs » Thu Jan 07, 2016 3:27 pm

I got it, I got it , I got it . . .

Investors are moving from the WSC to the PBC !!!

WSC = Wall Street Casino
PBC = Power Ball Casino
~Alumnus, Retirement Class of 2014 || Black Swan Ready Portfolio with a 0% spending rate~

tj218
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Re: U.S. stocks in freefall

Postby tj218 » Thu Jan 07, 2016 3:34 pm

[quote="HomerJ"
Seriously, we just had a 10% drop in August/September, right? Then it bounced back. What's different 4 months later that THIS time, you need to go all bonds?[/quote]

Like I said, I overreacted, went very heavy on bonds. Maybe that's mistake #2 (#1 would be deviating). If so I am prepared to deal with those consequences. I'm not afraid of a slight downturn, I am afraid of a deep, rapid downturn.

If in 30 days, when my fears of a systemic shock don't pan out or look likely, I am going back into stocks.

I know this defies wisdom and the philosophy. But I don't see myself getting substantially hurt by this move this one time. You buy homeowner's insurance in the event of a fire. It costs you a premium, but you still do it. In my mind, I feel like a wildfire is right next door, I am paying the premium to protect my home. Worst case, I lose potential gains over the next 30 days. Okay, that's my premium for safety that I am prepared to pay.

IF you knew the market was going to drop like a rock, do you stay the course for the sake of staying the course or do you try to minimize your risk? The flaw in this is I am not clairvoyant. I can't possibly know what the market will do. I have a beliefabout the state of the global economy and equity markets and I have staked a position to minimize my risks.

I do appreciate the discussion/interventions you are all probably right. At the very least this can be a tale used for future Bogleheads who "get a feeling".
Last edited by tj218 on Thu Jan 07, 2016 3:58 pm, edited 1 time in total.

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dbCooperAir
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Re: U.S. stocks in freefall

Postby dbCooperAir » Thu Jan 07, 2016 3:35 pm

oldzey wrote:This thread really needs a soundtrack for full effect.


Funny stuff
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-

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Re: U.S. stocks in freefall

Postby Leeraar » Thu Jan 07, 2016 3:59 pm

tj218 wrote:Like I said, I overreacted, went very heavy on bonds. Maybe that's mistake #2 (#1 would be deviating). If so I am prepared to deal with those consequences. I'm not afraid of a slight downturn, I am afraid of a deep, rapid downturn.

If in 30 days, when my fears of a systemic shock don't pan out or look likely, I am going back into stocks.


More piling on: What you are describing is exactly the reason why investors underperform the funds they invest in.

In the fiscal cliff panic a few years ago, there was a BH person who sold and bought back within a few days, less than a week. He realized a loss of 5% vs. those who did nothing. That is 5% of your assets that is gone forever.

Edit: And, that was 5% in a few days, not measured in annual returns.

L.
Last edited by Leeraar on Thu Jan 07, 2016 5:30 pm, edited 1 time in total.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

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Re: U.S. stocks in freefall

Postby Jack FFR1846 » Thu Jan 07, 2016 4:13 pm

I get to pretend to be a market timer! I transferred money from my Ally account over to my credit union checking account. That had to settle. Then I initiated transfers in both mine and my wife's Roth accounts. That's currently settling. Once settled, it's going into the only fund in either account. One is total US stock and the other is S&P 500. Settlement could be tomorrow or it could be tonight. Maybe I'll get a Ouiji board too and make some predictions!
Bogle: Smart Beta is stupid

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Re: U.S. stocks in freefall

Postby GoldenFinch » Thu Jan 07, 2016 4:20 pm

oldzey wrote:This thread really needs a soundtrack for full effect.


Ha ha! But they are more cute than scary. :D

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Re: U.S. stocks in freefall

Postby michaelsieg » Thu Jan 07, 2016 4:25 pm

Did some tax loss harvesting in December and changed some EM funds (DGS and PXH) into VEMAX, which I like less than what I had, but the tax loss seemed to be worth it to me. My biggest concern was that EM would skyrocket early in the year and I would be stuck with VEMAX. Even though this decline hurts, I am somehow glad if I can change back into the funds I really want in early February.

ge1
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Re: U.S. stocks in freefall

Postby ge1 » Thu Jan 07, 2016 4:27 pm

[quote="tj218"
Like I said, I overreacted, went very heavy on bonds. Maybe that's mistake #2 (#1 would be deviating). If so I am prepared to deal with those consequences. I'm not afraid of a slight downturn, I am afraid of a deep, rapid downturn.

If in 30 days, when my fears of a systemic shock don't pan out or look likely, I am going back into stocks.

...quote]

The problem is not that you may miss small gains and buy in higher in 30 days. The problem is that you reacted based on your "feelings" and unless you change your AA, this will be happen again. Maybe the market is 3% lower in 30 days and you will feel smart buying back in at a lower prices - and then a few weeks later the feeling is back and then what?

Trust me, I went through these iterations many times myself and the answer was to lower my allocation to stocks and stick to my plan.

Good luck!


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