U.S. stocks in freefall

[VictoriaF]

Enjoy the ride and don't look down!

Should not you look in the direction of the movement?

Victoria

[broadstone]

I believe the S&P will fall to about 1600 which is when I'll be re-investing.

Oh, will the U.S. debt problem be fixed when the S&P 500 drops to 1600? That was the reason you gave for getting out of the market in the first place.

Still, good that you finally gave a real number... That last post of yours was pretty bad. "I'll do something, but I'm not saying what, depending if the Fed does what I think it will, but I'm not saying what I think it will do either".

Very immature post. Adding text I never wrote makes you look foolish. Don't be mad at me for predicting this correction months ago

[TheRightKost87]

I believe the S&P will fall to about 1600 which is when I'll be re-investing.

Oh, will the U.S. debt problem be fixed when the S&P 500 drops to 1600? That was the reason you gave for getting out of the market in the first place.

Still, good that you finally gave a real number... That last post of yours was pretty bad. "I'll do something, but I'm not saying what, depending if the Fed does what I think it will, but I'm not saying what I think it will do either".

Very immature post. Adding text I never wrote makes you look foolish. Don't be mad at me for predicting this correction months ago

Homer was paraphrasing, I wouldn't say that make's one foolish. Below is your actual quote, which by the ambiguity of it causes many posters to dismiss any claims you make for having done what now looks good in hindsight. But what should you care if no one on the Bogleheads message board believes you? You're dodging the bullet that the rest of us are taking right now (allegedly).

As promised...I will be switching from a cash position Thursday or Friday if Fed announces what I think they will. If not, I'll be staying 100% cash.

[FullYellowJacket]

Forget about US stocks! Vanguard total international (VXUS) is 28% off of it's peak. Emerging markets are down 38% since last May. Blood is on the streets in international markets, especially for US investors. Compared to those the S&P 500 is only down about 14%.

Fortunately DW and I are young, are not home owners, and have been busy paying off school outside of our retirement accounts. We actually just finished this month!

[Imbros]

Forget about US stocks! Vanguard total international (VXUS) is 28% off of it's peak. Emerging markets are down 38% since last May. Blood is on the streets in international markets, especially for US investors. Compared to those the S&P 500 is only down about 14%.

Fortunately DW and I are young, are not home owners, and have been busy paying off school outside of our retirement accounts. We actually just finished this month!

It is amazing how much the Emerging Markets (VEIEX) has come down. Just when I think it will stop its decline, it goes down a couple of more percentage. It reminds me again that I suck at market timing.

[Bustoff]

Enjoy the ride and don't look down!

Should not you look in the direction of the movement?

Victoria

You're right! When I zip lined across the Royal Gorge I looked down the entire way.

[scone]

Hold on tight for the ride, Yee- Hah!

Major Kong Rides the Bomb, from Dr. Strangelove https://www.youtube.com/watch?v=wcW_Ygs6hm0

"Express Elevator to Hell," from Aliens https://www.youtube.com/watch?v=uDLQg8ZKBS8

[HomerJ]

I believe the S&P will fall to about 1600 which is when I'll be re-investing.

I am curious though... What will change with the U.S. debt situation when S&P 500 drops to 1600?

It was only a matter of time the USA's massive debt sunk the stock market.

The economy / financial markets could not sustain at those bullish levels, especially with our debt levels which are out of control.

But this decision I made because I truly believe the US economy is a house of cards that will fall and be rebuilt soon enough. People stuck their heads in the sand regarding the housing market in pre-2006, same thing going on now in regards to the debt problem.

[TheTimeLord]

Still looking for VTI selling at $89.

[b23]

Everyone hang on, here we Gooo
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[Toons]

This reminds me of the 2000 decline.
Investors were ready to jump out the window....
The first floor window

[b23]

Hide behind BOND!!!

DISCLAIMER: Well, the above statement is not investment advice!

[flyingaway]

I had filled up the Roth accounts of my wife's and mine until last Friday. I will buy more in taxable account when S&P is down 20%, and again at -30%. In my opinion, you just do what you believe in.

[tj]

I had filled up the Roth accounts of my wife's and mine until last Friday. I will buy more in taxable account when S&P is down 20%, and again at -30%. In my opinion, you just do what you believe in.

How do you know that it is going to -20% and -30% before it goes +20% or +30%?

This sell-off seems irrational to me. Why are so many sellign ownership in quality companies for such a reduced asking price? I just put in another buy order...

[Crushtheturtle]

I revised my periodic taxable purchases from monthly to weekly.

Must. Get. Money. Into. Market. Faster.

[flyingaway]

I had filled up the Roth accounts of my wife's and mine until last Friday. I will buy more in taxable account when S&P is down 20%, and again at -30%. In my opinion, you just do what you believe in.

How do you know that it is going to -20% and -30% before it goes +20% or +30%?

This sell-off seems irrational to me. Why are so many sellign ownership in quality companies for such a reduced asking price? I just put in another buy order...

I do not know where the market will go. What I meant was I will buy more then it goes to -20% and -30%. If it does not go that direction, I have my Costa Rica vacation planned in March and Europe vacation in May.

[ge1]

....

Must. Get. Money. Into. Market. Faster.

We have been spoiled for a long time in the sense that any market drops were almost immediately follows by sharp upswings (recovery from the 2009 low being the prime example). This one may test our patience a bit more.

[GoldenFinch]

If the market continues to tank and I feel compelled to check my balances and make note of the carnage, I am going to remind myself to watch this "U.S. stocks in freefall" soundtrack instead.

This thread really needs a soundtrack for full effect.

[broadstone]

I believe the S&P will fall to about 1600 which is when I'll be re-investing.

I am curious though... What will change with the U.S. debt situation when S&P 500 drops to 1600?

It was only a matter of time the USA's massive debt sunk the stock market.

Lack of confidence is one of the reasons the market is declining. There are many articles that explain why the stock market is correcting but you already knew that. Stock consumers are doing what they did in 2008, heading for the exits when things turn South. I was just lucky (luck?) enough to get out when I saw the many warning signs last year.

And of course you know nothing will change regarding the debt situation. It's just one of the factors that's causing this mess.

[broadstone]

Homer was paraphrasing, I wouldn't say that make's one foolish. Below is your actual quote, which by the ambiguity of it causes many posters to dismiss any claims you make for having done what now looks good in hindsight. But what should you care if no one on the Bogleheads message board believes you? You're dodging the bullet that the rest of us are taking right now (allegedly).

As promised...I will be switching from a cash position Thursday or Friday if Fed announces what I think they will. If not, I'll be staying 100% cash.

What's ambiguous? I said I was going to 100% cash and I would reinvest when the S&P dropped to 1600. I cashed out when the Fed announced the interest rate hike as I knew thought it would be the straw that breaks the camels back.

[HomerJ]

Homer was paraphrasing, I wouldn't say that make's one foolish. Below is your actual quote, which by the ambiguity of it causes many posters to dismiss any claims you make for having done what now looks good in hindsight. But what should you care if no one on the Bogleheads message board believes you? You're dodging the bullet that the rest of us are taking right now (allegedly).

As promised...I will be switching from a cash position Thursday or Friday if Fed announces what I think they will. If not, I'll be staying 100% cash.

What's ambiguous? I said I was going to 100% cash and I would reinvest when the S&P dropped to 1600. I cashed out when the Fed announced the interest rate hike as I knew thought it would be the straw that breaks the camels back.

Really? "if they announce what I think they will"? That's a clear-cut statement to you? Did you think they would raise interest rates or keep them the same, or lower them? How are we supposed to know what you "thought they would do"?

Plus, what do you mean you cashed out when the Fed raised interest rates? You've supposedly have been 100% cash since June (What was different from April to June, by the way? Prices were just as high in April).

[TheRightKost87]

What's ambiguous? I said I was going to 100% cash and I would reinvest when the S&P dropped to 1600. I cashed out when the Fed announced the interest rate hike as I knew thought it would be the straw that breaks the camels back.

Again, your quote from earlier:

As promised...I will be switching from a cash position Thursday or Friday if Fed announces what I think they will. If not, I'll be staying 100% cash.

By "staying 100% cash" I think most people would interpret that as you were already 100% cash leading up to the Fed announcement in September. By "switching from a cash position on Thursday or Friday if the Fed announces what I think they will" I think most people would interpret that as you would be invested in equities (i.e. no longer 100% cash), if the Fed did what you thought. By your most recent quote, you knew the Fed would be raising interest rates (which they did). Therefore, they did what you thought they would, which triggered your "if" statement from before, meaning you were no longer 100% cash as of the Thursday or Friday of that week.

That is... unless what you've said in your posts haven't accurately tracked what you've done.

[dbCooperAir]

Its the biggest sale of the year and everyone is running out of the building

[ray.james]

Its the biggest sale of the year and everyone is running out of the building

lol! what a see-saw day.

[MrMojoRisin]

I bailed in 2008 and the market continued to fall for a bit.
However I developed "decisional paralysis" about getting back in.

If I had left things alone I would have been better off.

My AA must be correct, I'm not logging into a half dozed different sites and moving funds about.

This is my sound track.....

https://www.youtube.com/watch?v=DI_rkZIuHzw

[mlebuf]

The ants are prepared, bearing down, and staying the course. The grasshoppers are watching bubble vision, panicking and going to bonds/gold/cash....if they have any money in the market. If you think education is expensive, try ignorance.

[dbCooperAir]

This is my sound track.....
https://www.youtube.com/watch?v=DI_rkZIuHzw

Fitting song this week, RIP Glenn Frey.

[PandaParty]

I was stuck in meetings all day! Did I miss the Bear Market?

[oneleaf]

Homer was paraphrasing, I wouldn't say that make's one foolish. Below is your actual quote, which by the ambiguity of it causes many posters to dismiss any claims you make for having done what now looks good in hindsight. But what should you care if no one on the Bogleheads message board believes you? You're dodging the bullet that the rest of us are taking right now (allegedly).

As promised...I will be switching from a cash position Thursday or Friday if Fed announces what I think they will. If not, I'll be staying 100% cash.

What's ambiguous? I said I was going to 100% cash and I would reinvest when the S&P dropped to 1600. I cashed out when the Fed announced the interest rate hike as I knew thought it would be the straw that breaks the camels back.

So when they decided not to raise rates, you switched from a cash position back when you made the comment? And then sold in Dec when they raised rates? Or have you stayed in cash the whole time (which does not match your logic). What you thought they did, what they actually did, and what you actually did is still ambiguous.

It would be a lot easier to make a post on the day you sell saying "I sold all stocks" and make another post when you buy back in, saying "I bought back in". Unless of course this is all BS, as it is increasingly looking to be.

[oneleaf]

By your most recent quote, you knew the Fed would be raising interest rates (which they did). Therefore, they did what you thought they would, which triggered your "if" statement from before, meaning you were no longer 100% cash as of the Thursday or Friday of that week.

But back then, when he made the post, the Fed decided not to raise rates. It did not happen until months later.

[TomatoTomahto]

Unless of course this is all BS, as it is increasingly looking to be.

Winner winner chicken dinner.

[packet]

I bailed in 2008 ... If I had left things alone I would have been better off.

Thank you for posting.
Much better than the other thread within this thread... :/
Stay strong, we're all in this together.

Cheers,
packet

[CantPassAgain]

Unless of course this is all BS, as it is increasingly looking to be.

Winner winner chicken dinner.

This is a good one:

postby broadstone » Tue Jun 02, 2015 8:16 pm
I too started investing again in 2015 and think about being late to the bull party.

[carofe]

Warren Buffett said:

The stock market is designed to transfer money from the active to the patient

And I think that's happening this year.

We have been spoiled for a long time in the sense that any market drops were almost immediately follows by sharp upswings (recovery from the 2009 low being the prime example). This one may test our patience a bit more.

+1. Good point.

[shelanman]

You know... rightly or wrongly, I'm not really that worried about what's going on in the market these days.

But it sure was fun to watch balances grow much faster than contributions when times were good, and it is just so much less fulfilling to watch the number stay the same, or worse, decline somewhat, despite contributions.

Up-and-to-the-right always just feels so good in exactly the way that down-and-to-the-right just doesn't.

[AndrewHMeador]

Up-and-to-the-right always just feels so good in exactly the way that down-and-to-the-right just doesn't.

Down and to the left looks just the same as up and to the right! At least, when you're backtesting...

[lack_ey]

Just imagine if US returns were what emerging markets was the last 10 years:



Negative after inflation. Well, it's happened for 16 years in the US, certainly much longer than that in other markets. And even Vanguard's relatively optimistic annual investment outlooks would put that at a ~15% chance or so for the next ten years here starting about today (the exact number is unclear because it falls between histogram bins).

Better be ready for anything, whether it's some more nosediving, a rebound, a whole lot of sideways, or whatever.

[visualguy]

Negative after inflation. Well, it's happened for 16 years in the US, certainly much longer than that in other markets. And even Vanguard's relatively optimistic annual investment outlooks would put that at a ~15% chance or so for the next ten years here starting about today (the exact number is unclear because it falls between histogram bins).

Better be ready for anything, whether it's some more nosediving, a rebound, a whole lot of sideways, or whatever.

Correct, but it seems that many Bogleheads don't realize that their strategy doesn't necessarily work even over periods of many years.

[peterinjapan]

This drop is not fun, but we'll get through it all. I am awfully glad to have those rental properties in San Diego as a foil against stock problems. I can see why people like real estate investing...it's a lot more "real."

[carofe]

Very interesting and encouraging article.

http://www.wsj.com/articles/markets-are ... 1453336114

Unfortunately, you'll need a WSJ subscription for it.

Summarizing, we are doing better than we think, and the dependency of US businesses on China's demand represents less than 1% of our GDP, and on emerging markets also is not much. He also states that the oil problem in the US doesn't represent really a big problem for the economy. Lower prices are good for the American economy and the unemployment in the oil industry it can cause really it is not a big number comparing with the employment in the whole country.

[Leif]

Very interesting and encouraging article.

http://www.wsj.com/articles/markets-are ... 1453336114

I agree with the article. I'm in wonder when pundits on TV talk about a decline on oil prices as if it is a bad thing for the US economy. Are we a net importer or exporter? I'm guessing the market is taking the decline as a sign of a world-wide economic slowdown. I'm taking it as part a China story and part an oil price war from the producers. Anyway, the net effect on me is to feel more confident in my rebalancing. However, the market has proved me wrong in the past. Let's see.

[scone]

It's the ripple effect from the oil patch that could cause problems. Job loss, real estate downturn, small business failures, pullback from investment. The China issue is more complicated; our exports to China might not be huge, but if China implodes, that effects Europe. The big issue everywhere IMO is lack of organic demand. Central bank stimulus may pull that forward some, but it's not enough.

[CantPassAgain]

Negative after inflation. Well, it's happened for 16 years in the US, certainly much longer than that in other markets. And even Vanguard's relatively optimistic annual investment outlooks would put that at a ~15% chance or so for the next ten years here starting about today (the exact number is unclear because it falls between histogram bins).

Better be ready for anything, whether it's some more nosediving, a rebound, a whole lot of sideways, or whatever.

Correct, but it seems that many Bogleheads don't realize that their strategy doesn't necessarily work even over periods of many years.

Sure does seem like a lot of boglehead slagging going on on the boglehead forums nowadays.

Please, let us in on the strategy that "necessarily works"

[visualguy]

Please, let us in on the strategy that "necessarily works"

The point is that long-term buy and hold of stock market indices sometimes works and sometimes it doesn't, even over very long periods of time such as 16 years.

There is a widespread belief here that if you "stay the course", you will be rewarded. Looking at historical results, it's clear that this is the case only some of the time. It's particularly hard to justify this belief if you look at foreign markets. It has been a bit more solid in the US (i.e. there were more periods when the strategy worked), but whether the US will continue to be somewhat exceptional is a difficult question.

The question about what you can do instead with your money is an orthogonal question, and a different discussion.

[oldzey]

TGIF!

[mmcmonster]

I have a weekly purchase set up to buy Total Stock Market, and whenever I have a little extra money I buy in bulk.

Just put in a buy order on Wednesday to buy about two paychecks worth.

Figure I'll live off my emergency cash for the next couple weeks. If the market is still lower at that time, I'll do the same. If it's rebounding, maybe I'll start saving up just in case I owe taxes.

Life is good.

[HomerJ]

Please, let us in on the strategy that "necessarily works"

The point is that long-term buy and hold of stock market indices sometimes works and sometimes it doesn't, even over very long periods of time such as 16 years.

There is a widespread belief here that if you "stay the course", you will be rewarded. Looking at historical results, it's clear that this is the case only some of the time.

We here are aware of the 16-year period from 1966-1982... However, 16-years is not what I would consider long-term for someone saving for retirement.

Anyone who "stayed the course" over that 16-year period still did fine. It was an incredible time to accumulate (tough time to retire). The 30-year period of 1966-1996 gave incredible returns... All the money you saved for 16 years from 1966-1982 increased TEN times over the next 17 years.

So I believe you are incorrect. Looking at U.S. historical results, so far, it has always been the case that we have been rewarded for "stay the course".

It's particularly hard to justify this belief if you look at foreign markets. It has been a bit more solid in the US (i.e. there were more periods when the strategy worked), but whether the US will continue to be somewhat exceptional is a difficult question.

Japan is indeed an example that is scary (Although over-stated... No one invested all their money on one day at the very top).

And true, no one knows the future... I don't think the U.S. has been exceptional, however. I think many nations were still developing and that the other mature markets were held down by wars, and actual physical destruction. I don't see why we have to fall down to their historical returns; I expect them to come up to ours.

There's 1 billion Indians and Chinese joining the middle-class over the next 30 years, and they are going to want to buy Cokes and washing machines.

[lack_ey]

So what's the reason our returns haven't been as good as Australia's or South Africa's?

[mattshwink]

Sounds like even the BH's are moving to safer investments.

Not me....although I probably have 15 years to retirement. Slowly moving my AA towards an eventual 60/40 in retirement. But I am 90%+ in stocks right now (60/30/10 domestic/international/REIT) and other than gradually shifting roughly 2% more per year towards bonds (which I am doing every year regardless of markets) I am not making any changes.

At this rate you may self balance to your desired AA

In the short term, I have definitely shifted more into bonds as the stock portions of my portfolio have declined. But I'm in for the long term. The short term corrections, recessions, etc. don't bother me. In fact, a depressed market for 5-10 years with a run up afterwards like we saw after 2008-2009 would be great for me since I'm buying $47,000+ per year.

[wesgreen]

Please, let us in on the strategy that "necessarily works"

The point is that long-term buy and hold of stock market indices sometimes works and sometimes it doesn't, even over very long periods of time such as 16 years.

There is a widespread belief here that if you "stay the course", you will be rewarded. Looking at historical results, it's clear that this is the case only some of the time. It's particularly hard to justify this belief if you look at foreign markets. It has been a bit more solid in the US (i.e. there were more periods when the strategy worked), but whether the US will continue to be somewhat exceptional is a difficult question.

The question about what you can do instead with your money is an orthogonal question, and a different discussion.

If you think of 16 years as a " very long period of time", Bogle's strategy probably isn't for you.